Super typhoon Mangkhut has left deadly impacts in its wake across the northern Philippines, Hong Kong and parts of China, with significant damage in all three areas from strong winds, a high storm surge and extreme rainfall.
Unlike hurricane Florence on the other side of the world typhoon Mangkhut appears to have been more of a wind event than rainfall, as large amounts of damage have been reported due to strong category hurricane force winds that have devastated the initial landfall area in northern Luzon, Philippines and also created havoc in Hong Kong and southern China.
Images are emerging of significant coastal impacts from storm surge in the economically prosperous areas of Hong Kong and southern China’s Guangdong region, as well as damage from strong winds in both areas.
With insurance penetration much higher in both regions than the Philippines the impacts to insurance and reinsurance interests from typhoon Mangkhut are expected to come largely from here.
But the Philippines took the brunt of the storm, with the steepest storm surge and strongest winds battering the northern Luzon region, where multiple deaths have been reported and coastal towns have seen almost every home and business structure damaged.
Landslides caused the majority of the deaths in the Philippines, as torrential rains impacted the region for days. Coastal evacuations will have reduced the loss of life, but the overall impacts have been devastating for the region and its main output of agriculture.
After landfall in Luzon, which weakened the typhoon somewhat, Mangkhut moved on to pass to the south of Hong Kong. The city avoided a direct hit from the eye of the typhoon, but impacts have been significant with damage to modern buildings, a storm surge said to be as much as 3 metres in places and strong winds that were reported to sway skyscrapers.
While damage to buildings looks more superficial than structural, in terms of windows, cladding, etc, the wide area impacted means there could be a significant economic hit to Hong Kong and as a result a hit to exposed insurance and any reinsurance interests.
After Hong Kong Mangkhut moved on towards a landfall in southern China’s Guangdong region, near Jiangmen city, and also affecting cities including the prosperous Shenzhen.
Here too a significant storm surge of up to 3.5 metres occurred with coastal inundation that has flooded buildings along the sea, as well as damage from winds to assets in the area
A good idea of the level of damage seen in Hong Kong and China can be gained by viewing this thread on Twitter.
Starting a thread of various videos today in HK and Shenzhen as the world’s strongest storm #TyphoonManghkut wiping our cities. (Videos are not mine but collected from messages doing the rounds w WhatsApp and WeChat) pic.twitter.com/FXU5ITrFqN
— Jen Zhu (@jenzhuscott) September 16, 2018
It remains far too early for any estimates of economic or insurance and reinsurance industry damage at this time.
Typhoon Mangkhut could impact some ILS strategies, due to the expansion of collateralized reinsurance into Asian markets. But most of the impact from this storm would be expected to come from quota shares and sidecars, should the eventual impacts be large enough for sponsors to call on support from the capital markets.
However the potential for ILS market impact from Mangkhut will be small and mostly attritional, as the traditional insurance and reinsurance companies with the largest market shares in the region would be expected to shoulder the majority of the claims.