Typhoon Nanmadol seen as Japanese industry loss threat

Update: See our more recent article on typhoon Nanmadol. While tropical storm Fiona may be concerning some, given the uncertainty in its eventual path, on the other side of the globe typhoon Nanmadol is seen as a relatively significant Japanese loss threat by insurance and reinsurance market interests.

Typhoon Nanmadol is set to strike southwest Japan with sustained winds of 100 mph and higher, plus gusts of up to 130 mph, according to recent forecasts.

It’s not just the potential for Category 3 strength winds though, rather it’s the fact the forecast for typhoon Nanmadol is for the storm to travel the length of Japan, so it could deliver a particularly wide damage footprint.

Still strengthening, typhoon Nanmadol is expected to impact the Southern Japanese islands through Friday and a large swathe of the main Japanese islands later this weekend and into early next week.

The fourteenth typhoon of the season, typhoon Nanmadol is expected to approach as a large and powerful storm, with southwest Japan, including Okinawa Prefecture, the Amami islands in Kagoshima Prefecture and the southern Kyushu region, the first to be hit and likely to experience the strongest winds and storm surges.

After, striking the southwest region of Japan, typhoon Nanmadol is forecast to turn more easterly direction and track the length of Japan, weakening as it goes. Click the image below for a larger version.

As much as 10 to 12 cm of rain is forecast for Kyushu, but typhoon Nanmadol could cause significant rainfall and flooding impacts further north and east as well, some forecasters suggest.

Insurance and reinsurance market sources are watching typhoon Nanmadol, as it has the potential to deliver a relatively significant industry loss, if it continues to look like striking the Japanese main islands with stromg Category 2 or 3 winds.

Andrew Siffert, Senior Meteorologist at insurance and reinsurance broker BMS commented, “Super Typhoon Nanmadol is predicted to strike Japan with 125 mph category 3 winds in the next 48 hours. This is looking like a devasting blow for Japan as Nanmodol tracks are northwest along the entire length of Japan’s mainland.

“This will likely be a pretty big news event for the worldwide insurance industry next week.”

As a result, it looks like both the Atlantic and Pacific need watching across the weekend and no matter what happens to Fiona, Japan is facing a difficult few days with typhoon Nanmadol.

It’s also worth noting that Japanese typhoon risk is a reasonably large exposure for the insurance-linked securities (ILS) market, in both catastrophe bond and collateralised reinsurance form. With a number of Japanese typhoon cat bonds also covering water driven impacts from rain and surge, as well as wind damage.

So ILS fund managers will be watching this typhoon closely too.