Reinsurance market sources are suggesting that the industry loss from typhoon Jebi in Japan will get closer to $12 billion, as loss creep continues from what is the most costly typhoon event to ever hit the country.
Previously, Property Claim Services (PCS) gave its first official estimate for typhoon Jebi, having recently expanded its range of insurance and reinsurance market loss data aggregation and index reporting services to include non-marine catastrophe losses in Japan.
In that first estimate PCS pegged typhoon Jebi’s insurance and reinsurance market wide loss at $10 billion, which was already an increase on previous estimates as loss creep continued to drive the total higher.
It was more than double the early risk modelling firm estimates and higher than the major global reinsurance firms had estimated as well.
Now, our market sources in Japan and elsewhere tell us the industry loss from typhoon Jebi has continued to rise, with an expectation that the total sits closer to $12 billion at this time.
PCS had told us that ongoing loss creep was a distinct possibility with typhoon Jebi, so we spoke to Tom Johansmeyer, Co-Head PCS for further clarity.
“While we don’t report on losses between published estimates, there is a sense from the market that Jebi should continue to develop,” Johansmeyer explained.
“Prior to launching PCS Japan in February, we saw the estimate move rapidly as we were building the loss index, and we had a clear sense of that as we gathered data for our first estimate,” he continued.
The complexity of the typhoon Jebi loss situation has perplexed some and now has been the main driver of higher reinsurance rates at the Japanese April 1st renewals.
As we explained recently, the renewals are set to result in some steep price increases for Japanese wind exposed reinsurance layers at loss affected lower levels in reinsurance towers, as well as for loss affected aggregate reinsurance renewals.
The continued loss creep from Jebi shows that rate increases achieved for the April reinsurance renewal were certainly warranted.
Typhoon Jebi’s industry loss escalated quickly to $10 billion, from initial estimates that were often as low as $3 billion or so, demonstrating just how complex a catastrophe loss event this has been. Now it looks set to get closer to $12 billion before the industry loss settles.
“The initial range we received overall suggested that we’d need to keep it open to capture future creep, which we plan to release 90 days from our last estimate, in accordance with our methodology,” Johansmeyer explained.
It seems likely that the figure will have risen at that point in time.
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