japan typhoon

The eventual losses from typhoon Nanmadol in Japan is likely to be a significant event for Japanese primary insurers, Twelve Capital believes, while the investment manager also notes that some reinsurance layers are likely to trigger on the back of the storm.

Typhoon Nanmadol made landfall in southwest Japan in the Kagoshima region of Kyushu yesterday. While winds were reported as high as 150 mph, in terms of gusts, Nanmadol noticeably weakened, with rainfall, flooding and landslides appearing the main threats.

Typhoon Nanmadol is a potentially significant Japanese industry loss threat for insurance and reinsurance market interests, while meteorologists are warning it could be more impactful than recent damaging typhoons Jebi and Hagibis.

Update: See our more recent article on typhoon Nanmadol. While tropical storm Fiona may be concerning some, given the uncertainty in its eventual path, on the other side of the globe typhoon Nanmadol is seen as a relatively significant Japanese loss threat by insurance and reinsurance market interests.

The Northwest Pacific typhoon season, which is one of the peak zone perils for reinsurance, catastrophe bond and other insurance-linked securities (ILS), is forecast to see activity levels roughly 20% below-normal, as the effects of La Niña are increasingly expected to last through summer and into Autumn.

To the reinsurance and insurance-linked securities (ILS) market, earthquake risk is one of the biggest peril threats in the world and one that the market can’t be complacent about, according to Paul Wilson, Head of Non-Life Analytics at Securis Investment Partners.

The impact and subsequent loss creep from typhoon Jebi in Japan in 2018 caught many insurance-linked securities (ILS) investors by surprise, but the eventual deviation from initial vendor model loss estimates doesn’t translate to a fundamental issue with the models themselves, say industry experts.

Reinsurance broker Guy Carpenter has warned of above-normal potential for tropical cyclones, or typhoons, in certain parts of the western North Pacific basin this year, with an above-average number of storms anticipated.

According to analysts, loss development from last year’s Japanese typhoon Hagibis is not following the same path as 2018’s Jebi, with the current prognosis being that development is much better than feared.

Three tranches of catastrophe bonds exposed to Japanese typhoon wind damage have traded up around 10% in recent weeks, as the market’s view of how large the eventual industry losses from typhoon Jebi and Hagibis will be has moderated somewhat.