Charles Franks, CEO of Lloyd’s insurer and reinsurer Kiln, said that while the storm is “undoubtedly a human tragedy”, but that lack of insurance buying in the region will limit the industry’s exposure.
Catastrophe risk modeller Risk Management Solutions (RMS) said Haiyan had winds as high as 195mph (315kmh), rains and storm surge “expected to cause widespread devastation” in the Central Philippines.
“Super Typhoon Haiyan’s maximum sustained winds of 195 mph could make it the strongest tropical cyclone in world history,” says Neena Saith, director and meteorologist at RMS.
Consultancy PwC said the Philippine area hit by the storm only has around 1% insurance penetration, as measured by premiums as a percentage of GDP.
“From what we are seeing this morning, Typhoon Haiyan is clearly one of the worst typhoons to have hit the Philippines this year,” said Mohammad Khan, insurance partner at PwC.
Franks at Kiln added that the storm might yet hit areas with a higher concentration of insurance exposures.
“It could yet sail on to Vietnam, which could be even more concerning from an insurance loss perspective,” he said.
Khan at PwC said the storm “appears to be as severe” as Typhoon Bopha, which hit the southern Philippine island of Mindanao in December 2012, resulting in reported economic losses of $1bn, but global insured losses of under $80m.
“Therefore we would not expect the level of insurance losses to be anywhere near as significant as the economic loss,” added Kahn.
PwC noted that for reinsurers seeking growth across Asia Pacific markets, the category 5 Haiyan is a reminder of catastrophe risk within the region.
"The reinsurance classes of business most likely to be impacted are commercial and industrial property, and some marine classes. The future revenue potential is attractive and premium has grown as much as 12% in past years, but catastrophe risk management will be a key component of any growth strategy,” said Dom del Re, an associate director and cat risk specialist within PwC’s non-life advisory practice.
“Even allowing for the events in the Philippines this has been a benign year for the global catastrophe reinsurance markets and if this activity continues to the end of the year, this will have a downward pressure on rates,” added del Re.