japan typhoon

Industry losses from the flood driven damage of typhoon Hagibis could reach into the double-digit billion dollar range, according to ILS manager Twelve Capital, who also highlighted that in the ILS market it is collateralised retrocession that appears most at risk of performance impacts.

Typhoon Hagibis loss impact on insurance, reinsurance and insurance-linked securities (ILS) markets is likely to drive further rate improvements at upcoming renewals, but the market should watch out for potential loss creep, analysts at KBW warn.

Typhoon Hagibis is estimated as likely to cause an insurance and reinsurance market loss somewhere in a range from $8 billion to as much as $16 billion, by AIR Worldwide.

An early estimate suggests that Japanese typhoon Hagibis could eventually drive in excess of $10 billion of insurance and reinsurance industry losses, which when added to the other recent typhoon Faxai could see the 2019 typhoon season leaving a larger dent in the industry than 2018’s Jebi and Trami combined.

The assessment and quantification of insurance and reinsurance market losses after typhoon Hagibis is to be complex and likely prolonged as a result, but there is a chance of some performance impact to private collateralised reinsurance deals, according to ILS investment manager Twelve Capital.

The eventual industry loss from typhoon Hagibis could reach the level seen with the other recent Japanese typhoon Faxai, while together the losses they bring to the industry may be enough to accelerate reinsurance rate rises in April 2020, according to KBW analysts.

Specialist catastrophe bond and insurance-linked securities (ILS) investment manager Plenum said that Japanese typhoon  Hagibis won’t be severe enough to trigger any cat bond losses and that any secondary market price impact will be short-lived.

Typhoon Hagibis has caused severe flooding, as well as some damage from its winds, across a wide swathe of Japan after the storm made landfall yesterday evening local time in Shizuoka prefecture and passed across the Tokyo metro area.

Japanese typhoon Hagibis will add “enormous complication” in allocating and finalising losses, while claims processes in Japan have likely not moved on since last year’s Jebi and its significant loss creep, according to the CEO of reinsurance firm RenaissanceRe.

Typhoon Hagibis remains on track towards Japan, with Tokyo and the surrounding area now firmly a target and the storm forecast to make landfall as a Category 1 or 2 equivalent storm on Saturday.