Typhoon Faxai domestic insurance market loss likely to equal Trami: GIAJ

Domestic insurance industry losses from recent Japanese Typhoon Faxai are anticipated to reach a similar level to 2018’s Typhoon Trami, according to the General Insurance Association of Japan (GIAJ).

With insurance and reinsurance industry loss estimates suggesting a total bill for the global industry of between US $3 billion and $7 billion, the estimate from the Chairman of the GIAJ, made at a press briefing yesterday, only covers the Japanese domestic non-life insurance companies claims.

As we explained yesterday, two of the largest Japanese domestic insurance groups (SJNK and MS&AD) have already said that they anticipate their claims reaching close to US $1 billion each.

Yasuzo Kanasugi, Chairman of the GIAJ and a senior executive of Aioi Nissay Dowa Insurance Co., explained that his organisation anticipates claims from Typhoon Faxai rising above JPY 300 billion and likely equalling or rising above the figure seen from Typhoon Trami.

Trami in 2018 resulted in JPY 306.1 billion of claims (roughly US $2.8 billion) reported by Japanese domestic non-life insurers, becoming the sixth most costly Japan typhoon event on record for the local insurance industry.

Trami’s total re/insurance industry loss was estimated at somewhere between US $3 billion and $4.5 billion.

It’s easy to anticipate Typhoon Faxai rising to that level or above, based on the damage seen and the early reports coming out of the global insurance and reinsurance market.

Almost 185,000 claims have already been reported to the GIAJ, a figure that is expected to rise substantially over the coming days.

More than 161,000 of the claims so far received come from fire insurance policies, so relate to property damage, while almost 20,500 are for damage to automobiles and the rest from accident and other insurance policy claims.

Major global insurance and reinsurance groups that are active in Japan, such as Swiss Re and AIG, would also be expected to take a relatively significant impact from Typhoon Faxai, given their commercial property operations in Japan.

This should easily result in the eventual industry impact rising well into the estimated range provided by AIR Worldwide.

Reinsurers are set to take their share, as it’s understood some of the lower layers of Japanese catastrophe reinsurance programs may come into play for the second year in succession, which should add further impetus to the calls for higher pricing in the region next April.

At this stage it still seems impacts to insurance-linked securities (ILS) funds will largely be through private quota shares and collateralised reinsurance deals, with catastrophe bonds seemingly not exposed due to the level of losses falling below where cat bonds would typically attach for Japan typhoon events.