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The potential for larger windstorm losses in Asia continues to increase because of population growth and an increase in exposed assets, among other factors, according to an analysis released Tuesday by Allianz Global Corporate & Specialty S.E.
This was among numerous highlights of the Allianz S.E. unit’s “Hurricane Katrina 10: Catastrophe Management and Global Windstorm Peril Review,” which was compiled from internal and external sources since 2005’s Hurricane Katrina.
The study noted that the Northwest Pacific Ocean is the most active basin on earth, generating more than twice as many tropical storms annually — 26 — than the 11 annual tropical storms in the Atlantic. “Increasing assets and a booming population clustered around tropical storm hotspots in the face of intensifying storm activity means the potential for larger windstorm losses across Asia continues to increase,” Allianz said in the report.
The survey pointed out that population growth, socioeconomic growth and urbanization are the most important drivers of the overall increase in exposure. “Exposure rises most rapidly in developing countries, as development moves increasingly into areas of high and rising flood risk,” said Allianz.
Citing a study by the Organization for Economic Cooperation and Development, Allianz pointed out that 10 years ago when Katrina struck, the top 10 cities in terms of assets exposed were Miami; Greater New York; New Orleans; Osaka-Kobe, Japan; Tokyo; Amsterdam; Rotterdam, Netherlands; Nagoya, Japan; Tampa-St Petersburg, Florida; and Virginia Beach, Virginia. But Asian cities will account for 80% of the top 10 exposed locations in 2070, according to the OECD projection.
The study also notes that in 1950, only New York and Tokyo had urban clusters of at least 10 million people. Now, there are 28, 15 of which are in Asia.
“Statistics forecast that the population in Asia is set to double by 2050 — particularly in urban coastal areas. An increase in prosperity also means the number of people defined as ‘middle class’ is expected to double between 2009 and 2020,” said the Allianz report. “And future increases in income are likely to double tropical cyclone damage even without the impact of climate change, according to a 2012 report on The Impact of Climate Change on Global Tropical Cyclone Damage, published in Nature.”
Allianz said the situation is made worse by the fact that exposure growth “is far outpacing take-up of insurance coverage, resulting in a growing gap in natural catastrophe — including windstorm — preparedness and response.”
It notes that 2013’s Typhoon Haiyan is the costliest tropical storm event in Asia in terms of overall losses — $10.5 billion — in the past 35 years. But only about $700 million was covered by insurance.
Insured catastrophe losses in 2014 fell to the lowest level since 2009, according to a report released Wednesday by Guy Carpenter & Co. L.L.C.