February 20th, 2014

Asia/Australasia Catastrophe Review, 2013

Posted at 1:00 AM ET

Asia and Australasia also received their share of both natural and man-made catastrophes in 2013. One of the most costly man-made events occurred in China after a major fire hit a large microchip factory in September. The blaze caused significant damage to the SK Hynix-owned facility in the city of Wuxi, with reports saying the cost to the (re)insurance sector is expected to range between USD900 million and USD1 billion. The incident represents the most expensive single-risk loss on record to occur in China.

The region was also hit by a number of destructive natural catastrophes during 2013. The first major event of the year occurred in Australia as severe floods affected Queensland and New South Wales, incurring insured losses of approximately USD1 billion, according to the Insurance Council of Australia.

Tropical cyclone activity across Asia also caused widespread devastation, despite relatively low insured losses. The North Indian basin saw five storms of tropical storm strength or higher, with three cyclones. The strongest of these, Cyclone Phailin, made landfall in October on the northeast coast of India, causing notable flooding.

In the Northwest Pacific Ocean, there were 29 named storms, 16 typhoons and seven super typhoons, with an explosive increase in tropical cyclone activity in the mid- to late-autumn months. The most impactful of these included Typhoon Fitow and Super Typhoon Haiyan. Typhoon Fitow made landfall in China in October, with some reports estimating insured losses of USD1 billion.

Meanwhile, Super Typhoon Haiyan was possibly the most powerful landfalling tropical cyclone on record as it affected the Philippines in November. Haiyan later affected Vietnam and China. Tragically, Haiyan inflicted over 7,000 fatalities, with exceptionally severe damage in the Philippines due to extreme winds and storm surge. Haiyan incurred insured losses of USD1.5 billion, according to the Philippine Insurers and Reinsurers Association. Due to the low insurance penetration in the country, this was a relatively small portion of the total loss of approximately USD10 billion.

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With the forecast of a neutral season of the El Niño Southern Oscillation (ENSO) forecast by the NOAA Climate Prediction Center, statistical guidance for the 2014 tropical cyclone season is difficult to determine. Some guidance indicates that a weak El Niño could develop, which would be statistically associated with elevated tropical cyclone activity in the North Pacific basin.

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