Willis Re: Super Typhoon Haiyan insured loss $500m to $700m

Reinsurance broker Willis Re has said that it believes that the insured loss total from Super Typhoon Haiyan could be in the region of $500m to $700m, which is at the top end of estimates for insured catastrophe losses from Haiyan which have been published so far.

Richard Sanders, Executive Director at Willis Re in Singapore, commented on Haiyan; “Willis Re believes that the potential insurance market loss from this event could be in the region of USD 500 to USD 700 million. This estimate is based on detailed wind speed data from a range of sources that allowed Willis Re to derive a wind field map for the storm. We combined this wind field with our view of exposure and vulnerability from published academic sources to calculate the market loss.”

Earlier this week, risk modelling firm AIR Worldwide estimated insured losses from the event as in a range of $300m to $700m, so Willis Re’s estimate perhaps narrows that expected range of industry loss somewhat.

Sanders continued; “As many of the exposures in the affected regions are uninsured or underinsured, potential post-catastrophe insurance recoveries are likely to be a relatively small proportion of economic losses. Whilst anecdotally, premium volume is growing faster than in many other regions of the world, the Philippines still has one of the lowest insurance penetration rates. Current estimates indicate that Haiyan will be counted as one of most the most significant storms in recent times for the Philippines, however it is too early to state with any certainty how much of the damage will end up as recoveries in the reinsurance market.”

Another figure for losses that has emerged is from the UN Food and Agriculture Organisation, which said that it expects losses to crops of at least $110m and more than double that in terms of damages to the Philippine agricultural sector.

Immediately after the catastrophe Bloomberg quoted Kinetic Analysis Corporation as saying that it expected total economic losses to reach $14 billion with insured losses of up to $2 billion. Since then, expectations for insurance industry losses from Haiyan have varied, but now it seems some consensus is beginning to emerge for an insured loss of over half a billion dollars but under one billion.

Typhoon Haiyan is unlikely to trouble any collateralized reinsurance contracts at industry losses of that level, as the exposure levels in the Philippines are so low.