Doksuri flooding leads Asia cat loss bill as claims fall in Australia
Asia continued to see one of the largest disparities between economic and insured losses during the first nine months of 2023, with Gallagher Re estimating the region’s protection gap at 94 percent for the period.
Analysis by the reinsurance broker shows the region accounted for just 4 percent of global insured losses during the nine-month period, but 22 percent of overall economic losses.
This equates to an insured loss bill of $3.7bn in the region, with economic losses of $63.8bn.
This means only 6 percent of economic losses in the region were insured during the first nine months of the year. Verisk’s average annual loss analysis suggests 12 percent of losses in Asia will typically be insured.
Ten storms formed in the Western North Pacific Basin during the third quarter, of which eight made landfall in East Asia and the Philippines.
The most significant event was Typhoon Doksuri, which brought the heaviest rainfall in Beijing since records began 150 years ago.
According to China’s Banking and Insurance Regulatory Commission, more than 266,000 claims were filed as a result of the flooding, costing in excess of $1.3bn.
Gallagher Re listed the post-Doksuri flooding as the second-costliest economic loss event of 2023 to date.
“Any billion-dollar industry loss event in China is notable,” explained Steve Bowen, Gallagher Re’s chief science officer.
“The remnants of Doksuri combined with additional monsoon rainfall brought significant flooding to the Greater Beijing region – it resulted in a $1.3bn loss, which is a big number for the country.
“Economic losses for that event were around $20bn, highlighting that there is still a significant protection gap. But China is an example of an area where we are seeing more insurance take-up.”
A further 35,000 claims were filed in China following Typhoon Saola in late August.
In Japan, heavy rains resulting from Typhoon Mawar resulted in around ¥40bn ($280mn) of claims, according to the General Insurance Association of Japan.
Events such as Doksuri and Mawar highlight the growing impact of flooding related to tropical cyclones.
Losses fall in Australia
Australia has seen reduced catastrophe activity this year. For the 12-month period from July 2022 to July 2023, the Insurance Council of Australia (ICA) reported a catastrophe claims bill of A$1.6bn ($1.0bn) across four major events.
This equates to just 22 percent of the prior-year period’s A$7.3bn total, which was largely driven by A$6bn of losses from flooding in southeast Queensland and New South Wales in the first quarter of last year.
The most notable recent event was the Newcastle hailstorms in May this year, which the ICA has estimated as a A$238mn insured loss event. The majority of the damage from this event was for cars and other vehicles.
Bowen said the combination of a strengthening El Niño and the transition to a positive phase of the Indian Ocean Dipole (IOD) – a broad pattern of sea-surface temperature changes in the western and eastern Indian Ocean – brings potential for elevated wildfire risk in Australia.
“The last strong IOD phase was in 2019-2020, which for Australia saw its costliest bushfire event on record, with losses of $2bn. While I’m not suggesting we will see a repeat of that, Australia has seen very hot, dry conditions recently.
“While that continues alongside a developing El Niño, we need to recognise there will be significantly higher potential for major events to occur in Australia from a bushfire and drought standpoint.”
Global loss tally nears $100bn
On a global basis, insured losses during the first nine months of 2023 suggest this year will again see an industry loss bill in excess of $100bn.
Preliminary estimates from Gallagher Re and Aon have suggested insured losses of $93bn and $88bn respectively as of the end of Q3.
Severe convective storms (SCS) have again been the main driver of loss, continuing the trend of recent years.
Gallagher Re has estimated US SCS losses at $54bn for the nine-month period, with Aon reporting industry losses of $50bn+ for the peril.
As Munich Re has noted, Europe has seen seven billion-euro insured loss events this year, including four in the third quarter. These include July’s Italian hailstorms – estimated to have cost insurers $2bn – as well as Storm Hans in Norway, flooding in Slovenia, Austria and Croatia, and another hail event in Germany in late August.
In contrast, this year’s Atlantic hurricane season has delivered limited losses, with Hurricane Idalia being the only notable event. Damage estimates for Idalia have fallen since early projections of a potential loss in the $5bn range were issued – Gallagher Re’s latest estimate for the event indicates an insured loss of just $1.25bn.
“The good news has been from Hurricane Idalia – there was concern it had potential to become a much more expensive event,” Bowen said. “But if you were going to play a landfalling Category 3 storm in Florida, you couldn’t have found a better place from an industry perspective.
“While it will be another billion-dollar event – we have the loss estimated at $1.25bn – it impacted an area of very low population density. Around 200 miles to the south and it would have been an entirely different type of loss.”
The lack of industry losses from US hurricanes is despite a busy Atlantic season, which at the time of going to press has seen 20 named storms.
“The fact that right now we are facing another $100bn loss year for the industry, but we haven’t seen a significant landfalling Atlantic hurricane, once again reinforces the primary versus secondary debate, and whether we should be placing more weight on secondary events.
“2023 is set to be the year where we have those conversations about whether we need to do away with framing of primary/secondary perils,” Bowen said.