Japan accounts for 62% of weather-related insured losses in eastern Asia over past three decades

As the Philippines faces widespread damage following Typhoon Haiyan, reinsurer Munich Re has released a new analysis outlining just how severe the impact of floods and typhoons has been in eastern Asia.

Over the past three decades, overall losses from weather-related events in eastern Asia have totaled around $700 billion, with insured losses of $76 billion. All figured are in U.S. dollars.

Japan accounted for 62% of insured losses over that time, Munich Re notes.

Floods, which have increased and are expected to continue to increase, have caused 56% of the overall losses in eastern Asia, but only 30% of insured losses. The 2011 flood in Thailand caused the largest-ever weather-related insured loss on the region, at $16 billion.

Typhoon activity is also expected to increase, according to Munich Re.

“Typhoon Haiyan, which swept across the Philippines on 8 November, has caused a terrible human catastrophe,” Ludger Arnoldussen, Munich Re Board member responsible for Asia-Pacific region commented in a statement.

“It underlines how important analyses and a deep understanding of these weather phenomena are. Governments and insurers need to develop risk-minimisation strategies in order to reduce the number of victims and losses in the future.”

Apart from Japan, the countries included in the reinsurer’s analysis – South Korea, China, Taiwan, Vietnam, Thailand, Indonesia and the Philippines – continue to be inadequately insured against weather risks, even as loss potential rises, it says.

Public-private partnerships have been one way to increase insurance penetration, and to cover state assets such as infrastructure, it notes.

Nearly half (45%) of all weather-related events in the period analyzed in the Munich Re report were floods, followed by storms (39%) and forest fires, heatwaves and droughts (16%).

A total of 120,000 people have lost their lives since 1980 as a result of these weather catastrophes, 57% from flooding alone, 39% from storm events, according to Munich Re.

Four of the five costliest weather-related catastrophes are also attributable to floods. At $ 393 billion, floods accounted for 56% of overall losses, followed by storms with overall losses of $233 billion (34%).

“There is no region of Eastern Asia that is immune to the threat of flooding,” Peter Höppe, head of Munich Re’s Geo Risks Research unit commented in a statement.

“The reasons for the strong increase in losses from weather catastrophes like floods are primarily socio-economic factors such as continued strong economic growth and the resultant increase in values in exposed regions. Urban agglomerations in coastal regions and rapidly expanding industrial parks located in river deltas are particularly at risk.”

Typhoon activity also remains a prevalent threat, especially for Japan, Vietnam, Taiwan and the Philippines, the report notes. The “megacities” of eastern China are also at a significant risk.

“In the last ten years, typhoon activity has been below the long-term mean level. Extrapolating these cycles into the future, we expect a phase of higher typhoon activity in the next few years,”  Höppe noted.