Super typhoon Mangkhut is approaching the Philippines with estimated 167 mph winds and gusts to 200 mph, threatening a devastating impact to the northern tip of the main island of Luzon when it makes landfall on Saturday.
After striking the Philippines in the northeastern Cagayan province on Saturday, super typhoon Mangkhut is expected to weaken but carry on with potential for storm impacts in Taiwan and hurricane force winds in Hong Kong and mainland China possible.
Super typhoon Mangkhut is estimated to be as much as 900 km in diameter and is expected to pose a severe threat to the northern Philippines even if it begins to weaken somewhat before landfall.
Locally known as typhoon Ompong and typhoon 29W, typhoon Mangkhut is set to bring extreme winds and rainfall to northern Luzon, with the influence of monsoon season rains set to exacerbate the situation.
There are warnings that typhoon Mangkhut could result in storm surges of as much as 23 feet in the landfall region, suggesting significant coastal damage to communities in its path.
After passing the Philippines the island of Taiwan could receive strong storm force winds and heavy rains, following which it will be Hong Kong and mainland China that is on watch for future impacts.
Typhoon Mangkhut has resulted in storm warnings for both Hong Kong, as it could pass within 200 km of the city, and the Chinese regions of Guangdong, Shenzhen and the southern coastal areas.
Some of these areas are home to significant levels of economic output, hence any hurricane force winds there could result in insurance impacts.
Typhoon Mangkhut is expected to near Hong Kong on Sunday and make landfall in southern China that night or into Monday.
Impacts may also be felt in northern Vietnam once typhoon Mangkhut has moved further ahead.
The insurance, reinsurance and ILS industry remains focused on Florence as the main current threat of losses, but Mangkhut should not be discounted given the wide area it will impact.
Whatever losses it creates for reinsurance and potentially ILS interests are expected to not be particularly significant, but the threat to lives and livelihoods of those in typhoon Mangkhut’s path is severe and sadly its impacts are likely to be deadly.
Once again this storm will likely show up the lack if penetration of insurance and risk transfer in the Philippines. While parametric insurance protection has been expanding in the region, it is largely focused on the more economically significant regions and capital.
A parametric insurance pilot has supplied coverage in the threatened region of Cagayan, and a $206 million catastrophe swap transaction for the Philippines supported by the World Bank has reinsurance and also ILS support, including from Nephila Capital.
So there is the potential for some impacts to the market from typhoon Mangkhut, but again the lower levels of insurance penetration, compared to regions of the world such as the United States, suggest losses to the sector will be relatively limited.