AIR Worldwide, the modelling agency, has published its initial loss forecast for Typhoon Hagibis, which struck Japan with Category 2 windspeeds on 12th October.
It has estimated insured losses of between $8bn and $16bn.
Whilst forecast to make landfall near Tokyo, it in fact made landfall to the south west of the capital with the worst of the resulting damage falling on central Japan, which experienced up to 100cm of rain in 24 hours. Around 90,000 houses were deprived of power and some 2,500 flights cancelled. Sporting events, including the Japanese Grand Prix and the Rugby World Cup, were postponed or cancelled.
Hagibis followed Typhoon Faxai, which made landfall on 9th September 20 miles from the centre of Tokyo. AIR’s current estimate for Faxai is for an insured loss of between $3bn and $7bn.
These figures compare to current industry estimates for a loss of up to $16bn from Typhoon Jebi, which struck the Kansai region of southern Japan in September 2018.
Alpha comment: we very much hope that the modelling agencies’ initial forecasts for these Japanese typhoons in 2019 will not see a similar significant loss creep experienced for Typhoon Jebi in 2018. Should the midpoint of the ranges for Faxai and Hagibis prove correct, these 2019 losses would match the quantum of the Jebi loss in 2018. On this basis, we would not expect the losses to have a major effect on the overall outcome of a Member’s spread portfolio for the 2019 year of account, however it will chip away at some of the profit. Given the current level of loss for Faxai and Hagibis, we would expect renewal pricing of Japanese windstorm reinsurance to increase by a minimum of 30% in April 2020, having increased by a similar level in April 2019 in the aftermath of Jebi.