Megacities must do more against typhoons
Megacities represent significant concentrations of exposure at risk from typhoons—with high population densities and often unregulated expansion—and efforts are needed to make them more resilient to natural disasters, Hemant Nagpal, managing director and specialist on Asia-Pacific models at RMS, told SIRC Today.
Tokyo, Manila and Shanghai are all exposed to several different natural disasters, and Nagpal suggested they must improve disaster preparedness and mitigation, and bridge the insurance protection gap to aid with the recovery after an event.
“If you look at the initial losses that are coming from Typhoon Mangkhut out of Hong Kong they are higher than one year premiums from fire, engineering and motor combined,” said Nagpal.
“It is a fact for Asia-Pacific and globally that market forces such as top line growth, competition, and excess and cheap capital are pushing down premium rates.
“Hato and Mangkhut seem to have wiped out the profits from the last few years in the case of Hong Kong insurers. Even in a situation with generally low rates, catastrophe models can help companies to be more methodical with risk selection and pricing adequacy.”
Mangkhut was one of the strongest storms of 2018 and was the strongest typhoon to affect Hong Kong since Rose in 1971, bringing wind speeds of 175km/h and resulting in the highest storm warning signal being raised for 10 hours.
Nagpal added that Hong Kong has high penetration in insurance, although the industry’s profitability is challenged with losses from Hato and now Mangkhut in quick succession.
It first bypassed Guam, causing flooding and power outages to the north of the island. It then made landfall in Northern Luzon in the Philippines as category 5 event, and although the insured losses were low in this rural region, it resulted in large economic losses mainly stemming from agriculture.
Mangkhut finally made landfall in Guangdong province, one of the most densely populated parts of China.
The typhoon caused wind damage across Hong Kong, Macau and southern China, with localised surge and inland flooding.
“The Philippines is one of the most natural hazard-prone countries in the world, but the insurance penetration seems to lag behind advanced markets with high hazard such as Japan,” said Nagpal.
“However, the World Bank released $496.25 million to support the Philippines government’s recovery efforts, rehabilitation, and reconstruction in the areas impacted by Mangkhut (locally known as Ompong).”
