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Storm Warning.

One of the biggest lessons to come from Typhoon Jebi is the possibility of multiple cat events impacting an area in a single year, said Christie Lee, senior director, analytics, at AM Best Asia-Pacific Ltd.

"What that signals to insurers is the need for sufficient coverage in aggregate insurance. So whether they are protecting the capital or surplus really depends on the adequacy of the aggregate coverage," she said.

Last year some areas of Japan were reeling from four separate events that struck within a matter of weeks. "That created a challenge for the industry to assess what damage was caused by which event and allocate losses to individual events," Steve Bowen, meteorologist and head of catastrophe insight at Aon, said.

Also challenging for the industry was the significant number of wind and flood claims to come from typhoons Jebi and Trami.

"Typically tropical cyclones lose some of their tropical characteristics by the time they make landfall in Japan given the higher latitude, but last year's storms maintained their tropical state and produced widespread wind and water-driven damage," Bowen said.

Flood-related losses were covered by cat bonds, said Steve Evans, owner of Artemis.

"One of the things I hope Japanese insurers learned from Jebi is that now, for the first time, typhoon cat bonds in the country also cover their losses for related flood risks," he said.

He added that ILS contracts also now include more coverage for elements like business interruption.

"Now that claims have come in and things are starting to settle down, one of the things that will be interesting to see going forward is how communities hard-hit by Jebi will rebuild and whether building code standards will be upgraded to make structures more modern and resilient to higher wind speeds," Aon's Bowen said.

He said the industry will continue to keep a close watch on what mitigation steps will be taken to ensure that future catastrophes from a residential and commercial perspective are protected.

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Publication:Best's Review
Date:Aug 1, 2019
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