Tokyo on watch as Typhoon Faxai approaches with 130mph+ winds

The Japanese capital city of Tokyo is watching approaching Typhoon Faxai closely, as the compact but powerful typhoon is forecast to come very close to the metropolis and Tokyo could experience significant winds as a result.

Typhoon Faxai has been rapidly intensifying and becoming better organised over recent days, resulting in a storm that currently is estimated to have sustained winds of greater than 130 mph, which could make it a Category 4 hurricane equivalent.

Some weakening is forecast as typhoon Faxai approaches Japan, but still the JTWC forecast shows a typhoon with sustained wind speeds of an estimated 126 mph, Cat 2, as it nears landfall.

Typhoon Faxai is forecast to curve and pass close to or over the Tokyo area of Honshu, Japan, with the timing of the curve important as to how long the city could endure strong typhoon winds.

Currently, typhoon Faxai is estimated to be packing wind gusts of up to 160 mph and as it nears Japan those may only have declined to 150 mph or so, meaning wind damage is a distinct possibility if typhoon Faxai moved directly ashore in the Tokyo area.

After the recent experience with typhoon Jebi, the insurance, reinsurance, insurance-linked securities (ILS) and catastrophe bond markets may want to watch Faxai closely over the next day.

Of course, Tokyo is a modern and largely well constructed city, with sea defences in place against surge, but Faxai’s strong winds do have the potential to cause a reasonable amount of damage, based on forecast strengths.

Japan’s meteorological agency warned against coastal and river flooding, rainfall, high winds and landslides.

If typhoon Faxai curves earlier it could miss or just brush the coast, but a later turn could bring it directly onshore into the Tokyo and surrounding region.

Hence the potential for insurance and reinsurance market losses is relatively high, but as with other recent storms timing of the turn and its track movements will be key.

Weather forecasters are warning of the potential for at least Category 2 hurricane force winds for the Tokyo area, if Faxai does not turn away, sufficient to create some impacts to the local and international insurance industry, with the potential for some reinsurance support to be required.

A number of outstanding catastrophe bonds have exposure to the major Japanese insurers portfolios, however no secondary pricing movements have been seen at this time.