Earthquakes in Taiwan and the Kumamoto prefecture of Japan and floods in southern China were the largest events. The reinsurance share of these losses appears modest. Barring a major catastrophe before the end of the year, catastrophe reinsurers are expected to return a healthy profit in Asia Pacific for the fourth year in a row.
Taiwan Meinong Earthquake
On February 6, 2016, a Mw 6.4 (ML 6.6) earthquake occurred in the Meinong District of Kaohsiung in southern Taiwan. The earthquake affected residential areas and the Tainan Science Park where many high-tech industrial factories are located. The total insured loss is estimated at USD 780 million; more than 80 percent is attributable to five large high-tech companies.
Collectively described as the Kumamoto Earthquake, a series of shocks in April 2016 caused at least 50 deaths in Japan. The Japanese government’s Cabinet Office estimated a total economic loss of up to USD 42 billion (JPY 4.6 trillion). Guy Carpenter’s analysis indicates that losses from the Kumamoto Earthquake will likely generate insured losses of approximately USD 5 billion to USD 5.5 billion, the majority of which will be covered by the residential earthquake scheme that is 100 percent reinsured by the Japan Earthquake Reinsurance Company, Ltd (JER).
Southern China Flood
Heavy rainfall across southern China in mid-June 2016 triggered deadly floods, and additional rainfall in the following month led to more flooding. Areas along the Yangtze River and Huai River were hit particularly hard. According to the Chinese government, over 5.46 million hectares of farmland was inundated as of mid-July. The Ministry of Water Resources of China estimated the total economic loss to be more than RMB 298 billion.