Typhoon Hato to have limited impact on Macau insurers
Rated non-life insurers in Macau will be able to withstand the Typhoon Hato losses with moderate impact on earnings, ratings agency AM Best said on Aug. 25.
Furthermore, Hato will a limited effect on the insurers’ financial strength.
On Aug. 23, 2017, Typhoon Hato (category 2 on the Saffir-Simpson Scale) made landfall just north of Macau, an Asian casino hub. The typhoon is the strongest storm in 53 years and caused massive damage to the city from strong wind and flooding, as well as leaving major districts without electricity for 24 hours.
While it is premature to predict the total insured loss to the industry, AM Best expects that the storm will have limited rating impact given their conservative reinsurance arrangements, low penetration of natural catastrophe coverage on personal lines and robust capitalization.
It is expected that the majority of the gross losses will come from commercial property and business interruption losses. However, most of these risks (especially the casino risks) are ceded to the international reinsurance market.
Personal insurance awareness is very low, as only a single digit of motor policies are comprehensive policies according to Macau Insurers’ Association, and a vast majority of the residential property insurance are fire only policies that do not cover water damage and flood.
