Typhoon Faxai is estimated result in an insurance and reinsurance sector loss of as much as $7 billion by catastrophe risk modeller AIR Worldwide.
Typhoon Faxai struck Japan on September 9th, impacting the Tokyo area with some of the largest and most significant damage seen in the Chiba, Kanagawa and Shizuoka prefectures.
The typhoon is estimated to cost the insurance and reinsurance market somewhere between $3 billion (JPY 340 billion) and $7 billion (JPY 740 billion), according to AIR Worldwide.
Typhoon Faxai resulted in damaging winds across the southeastern Honshu region, AIR Worldwide said, along with storm surge and heavy rainfall across coastal regions.
With impacts reported across Chiba, Kanagawa, and Shizuoka prefectures, the storm was felt widely.
Typhoon Faxai’s storm surge was the highest on the eastern shores of Tokyo Bay, with the Japanese Meteorological Agency (JMA) recording a storm surge of more than 1 meter in Mera, Chiba Prefecture.
The city of Izu in Shizuoka Prefecture experienced 17 inches of rainfall across a 24 hour period through early Monday, with rainfall falling at over four inches per hour.
Typhoon Faxai has surpassed Typhoon Higos for the strongest sustained wind speed at landfall in the region, AIR said, and the storm was tied with 1958’s Typhoon Helen for the lowest recorded central pressure.
Perhaps ominously, after the experience with loss creep, AIR warns that typhoon Faxai was comparable in strength to Typhoon Jebi, which impacted the southern Shikoku Island in 2018.
Faxia’s high winds resulted in the downing of two electrical towers and multiple utility poles, which left over 900,000 without power in the prefectures of Chiba, Ibaraki, Kanagawa, Shizuoka, and Tokyo, AIR further said.
In addition, the typhoon also impacted crops in the region, damaging rice fields and fruit farms just before harvest time.
AIR’s estimate that insurance and reinsurance interests will take between $3 billion and $7 billion of losses is based on an estimate of insured damage to property (residential, commercial, industrial, and agricultural/mutual) structures and their contents, as well as automobile from wind and storm surge.
It does not include any insured losses from precipitation induced flooding, landslides, infrastructure, Contractors All Risks (CAR) & Erection All Risks (EAR), marine hull, or marine cargo lines of business.
In addition, AIR’s estimate for up to $7 billion of losses from typhoon Faxai does not include business interruption, loss adjustment expenses and demand surge, the areas that a significant amount of the loss creep associated with typhoon Jebi emerged from.
The industry, including exposed insurance-linked securities (ILS) funds, will be watching the development of typhoon Faxai’s industry loss closely.