Stormy season

Stormy season

Japan topped last year’s global loss records thanks to super-typhoon Hagibis

By Bernice Han

Typhoon Hagibis was not just the most powerful storm to pummel Japan in decades when it made landfall last October. It was also the most costly natural disaster globally last year for the insurance industry.

The category 5-equivalent super-typhoon, packing winds of 180 kmh near its centre, exacted $US10 billion in insured losses, Munich Re says in its annual natural catastrophe roundup. Economic losses from the storm cost $US17 billion.

Another typhoon, Faxai, which struck the same greater Tokyo region a month earlier in September, ranked second, with insured claims of $US7 billion and $US9.1 billion in economic damages.

It was the second consecutive year of record windstorm losses for the host nation of the 2020 Summer Olympics, which will be held in July.

Numbers crunched by Aon are somewhat lower than Munich Re’s assessment, with Hagibis estimated to have racked up about $ US9 billion in insurance payouts and Faxai $US6 billion.

The preliminary numbers from Munich Re put the total economic bill from natural catastrophes last year at $US150 billion from 820 loss events. About 35% of the losses, or $US52 billion, were borne by insurers.

In both economic and insured loss terms, the financial toll was well below that of the previous three years. The $US150 billion in economic damages is lower than the 10-year average of $US187 billion.

A number of large events with losses in the low billions combined to push overall losses over the $US100 billion mark.

Hurricane Dorian, which lashed the Bahamas in August, ranked as the third most costly event for insurers, with $US4 billion in claims lodged. It was also one of the strongest Atlantic storms ever recorded and the most powerful to ever hit the Bahamas. By the time Dorian moved towards the US east coast, it had weakened considerably but still caused significant flooding.

Munich Re says two separate storms in the US placed fourth and fifth with losses of $US3.6 billion and $US2 billion respectively.

Cyclone Idai was the deadliest event last year, with more than 1000 lives lost when it hit Mozambique and neighbouring countries in south-east Africa in March. Globally, natural disasters killed 9000 people, down sharply from 15,000 in 2018.

What stood out last year, according to Munich Re, was the violence of the windstorms that hammered Japan, the US and other parts of the world.

Whether it’s overall economic damages, insured losses or fatalities, the top five natural disasters last year were all windstorms, the reinsurer says. Of the 33 events that caused at least $US1 billion or more in insured losses, nine were tropical cyclones, storms with flooding, or tornadoes.

Floods, flash floods and landslides made up 45% of natural disasters last year. Another 38% were the result of storms.

“The main events of the 2019 natural disaster year were enormous losses from tropical cyclones in Asia, widespread flooding in India and China, and severe storms in the US,” Munich Re Head of NatCatService Climate and Public Sector Business Petra Low says.

“Generally speaking, the distribution follows the long-term trend towards a greater number of storms and floods.”

In particular, the extreme precipitation of Hagibis further affirms how weather systems are, to a large degree, feeling the effects of climate change.

Hagibis, which means speed or velocity in Tagalog, the national language of the Philippines, dumped record rain across huge areas in Japan. Some places saw as much as a metre of rain fall within two days.

“The typhoon season shows that we must consider short-term natural climate variations as well as long-term trends due to climate change,” Munich Re Chief Climate and Geoscientist Ernst Rauch said.

“In particular, cyclones are becoming more frequently associated with extreme precipitation, as with Hagibis in Japan in 2019 and Hurricane Harvey in the US in 2017. Recognising these changes can form the basis for further preventive measures to reduce losses.”

Aon says the loss trends suggest larger and costlier events on a global scale can be expected this decade.

“Much of this increase will be directly tied to further population migration and exposure growth patterns to coastal and inland areas which have long been identified as highly vulnerable to natural peril risk.

“Scientific research continues to indicate that climate change effects will grow more obvious as sea level rise persists at an accelerated rate and more individual weather events will show signs of climate change influence.

“Climate change event attribution will remain one of the biggest questions to be answered.”

Swiss Re says the typhoons that struck Japan have again illustrated the country’s vulnerability.

The reinsurer says the typhoons of 2019 “further underscore the high exposure of urban regions in Japan to both typhoon wind and flood risks, in spite of the presence of mitigation infrastructure”.

“While climate change cannot be ruled out as an amplifying risk factor, it is certain that the last three events confirm the historical pattern of devastating Japanese typhoons in the middle of the 20th century.”

Swiss Re says its analysis of last year’s natural catastrophes further confirms the growing threat of climate change-fuelled secondary perils – a trend it has previously pointed to.

Floods, torrential rains, wildfires, prolonged droughts and other secondary natural catastrophes made up over half of last year’s insured losses.

Usually moderately severe and fairly regular, secondary peril events as defined by Swiss Re are a side-effect of larger primary natural catastrophes such as cyclones and earthquakes.

“There is more scientific evidence that climate change impacts the frequency and severity of secondary peril events today, warranting more focus for research. For primary perils like typhoons, science is far less conclusive,” Swiss Re Institute Head of Catastrophe Perils Martin Bertogg says.

“In addition, macro-risk factors like rapidly growing populations and property values in exposed areas contribute to the increase in losses resulting from natural catastrophes globally, making past experience a less definite predictor for future losses.”

For Australia, it’s fire and flood

Australia experienced one of its “most notable years” for weather disasters including a few that were “enhanced” by increased climate change influences, according to Aon.

The Townsville floods in February, with insured losses of nearly $1.27 billion, and the bushfires in November were among the biggest loss events last year.

Aon predicts the bushfires, which started in the second half of last year, are likely to become the costliest for local insurers since Black Saturday razed several Victorian townships in 2009. Black Saturday cost insurers about $1.76 billion.

Figures from the Insurance Council of Australia put insured losses from the current bushfire disaster at $1.9 billion from more than 23,000 claims.

The bill is still rising as claims assessments continue. The threat of more fires has not abated, with temperatures not expected to ease significantly this summer.

Munich Re describes Australia as having the “most extreme contrasts” in weather-linked events last year.

“At the start of the year, its northeast struggled with exceptionally heavy rainfall, which triggered extensive floods and landslides,” the reinsurer’s Head of NatCatService Climate and Public Sector Business Petra Low says.

“In the south-east…extreme heatwaves and drought over the course of the year led to devastating wildfires that are unprecedented in the country’s history.”