SUNDAY, SEPTEMBER 24, 2017
Typhoon Hato
8/28/2017 9:30:00 AM
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Post Landfall 18/28/2017 9:30:00 AM 
Landfall 8/23/2017 11:45:00 AM 
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Posting Date: 8/28/2017 9:30:00 AM

AIR Worldwide estimates that insured losses in mainland China from Typhoon Hato will be between USD 129.3 million (CNY 860.8 million) and USD 223.8 million (CNY 1.49 billion).

AIR’s insured loss estimates reflect take-up rates that vary by line of business and province. Note, however, that there is considerable uncertainty around these take-up rates.

AIR’s modeled insured loss estimates include:

  • Insured physical damage to onshore property (residential, commercial, industrial, and Construction All Risks/Erection All Risks) for both structures and their contents due to wind and precipitation-induced flooding in mainland China; losses in Hong Kong and Macau are not included in these estimates
  • AIR’s assumed take-up rates—that is, the percentage of properties in mainland China that are actually covered against wind and flood damage

AIR’s modeled insured loss estimates do not include:

  • Losses to uninsured properties
  • Losses to infrastructure
  • Losses from storm surge
  • Losses to crops, livestock, aquaculture, and poultry
  • Losses to auto
  • Losses resulting from physical failure of flood defenses
  • Losses from hazardous waste cleanup, vandalism, or civil commotion, whether directly or indirectly caused by the event
  • Demand surge
  • Other non-modeled losses

Storm Summary

Typhoon Hato rapidly intensified to the equivalent of a Category 3 hurricane and made landfall at 12:50 p.m. local time on Wednesday, August 23, in the city of Zhuhai in Guangdong Province—between Hong Kong and Macau. The region was brought to a near standstill by powerful winds, heavy rain, and storm surge. Hato is the seventh typhoon to impact China this year, and was the strongest to hit Hong Kong and Macau since Typhoon York in 1999. The center of the storm passed about 60 km south of Hong Kong, which experienced maximum sustained winds of 175 km/h, and about 16 km southwest of Macau, which reported gusts of 217 km/h. Waves up to 10 meters were reported in the South China Sea. At least eight are reported dead in Guangdong, including four in Zhongshan City and three in Zhuhai. Eight deaths were also reported in Macau.

Ahead of the storm, the government evacuated almost 27,000 people to emergency shelters. Most Hong Kong businesses were closed and the stock market shut down. Hundreds of flights were canceled, with Hong Kong’s and Macau’s international airports virtually shut down. Rail and ferry services were suspended, several expressways were closed, operations for parts of the subway system in Shenzhen were halted, and fishing vessels were recalled to port. Factories, courts, schools, and offices closed, and the stock exchange ceased trading. Ferry services between Macau and Hong Kong resumed Thursday morning with some delays.

Typhoon Hato continued through Guangdong Province and neighboring Guangxi, delivering strong winds and heavy precipitation. Hato was downgraded to a tropical storm later on Thursday at around 19:00 local time.

Reported Impacts

Guangdong Province

More than 6,000 houses have collapsed and 50,000 hectares of farmland have sustained damage, but three nuclear power stations were reported unharmed, according to Guangdong’s provincial government. Around 2.7 million households lost electricity at one point, with one quarter still waiting for power restoration, according to China Southern Power Grid. Rainfall of 1025 cm per hour was reported in some southern areas. On Hengqin Island in Zhuhai, a construction crane was blown down from the top of an unfinished high-rise building.

Guangdong’s densely populated capital city of Guangzhou is the economic center of the Pearl River Delta and is at the heart of one of mainland China's leading commercial and manufacturing regions; it is also a biotechnology hub. Zhuhai is a major shipping area with a deep water port. Major industries include electronics, software, biotechnology, heavy machinery, and petrochemical industries. The city’s Free Trade Zone has more than 150 foreign-funded industries and is home to the majority of the world’s printer consumables.

The cities of Zhuhai, Jiangmen, and Zhongshan reported suspended work, classes, and production, as some roads were closed. Strong winds have reportedly downed more than 2,000 trees in Guangdong Province. Some flooding occurred, but floodwaters had already begun to recede by Wednesday night. Ferry services resumed Wednesday night and fishing boats resumed activities on Thursday morning. Train services between Guangzhou and Shenzhen resumed Wednesday evening, with more trains to resume service Thursday, according to Guangzhou Railway Group.

Hong Kong

The typhoon passed Hong Kong first, hitting during high tide and causing massive swells and storm surge. A peak water level of 3.7 meters (more than 12 feet) was recorded in the neighboring coastal village of Tai O. Gusts of up to 207 km/h downed trees, tore down building scaffolding, and blew out the windows of high-rise buildings, creating wind-borne debris. Initial reports noted power outages and disruption to mobile phone and internet networks.

Macau

The resort city of Macau, the largest gambling hub in the world, experienced widespread power outages, downed telecommunications, blocked streets, and flooding. More than 4,000 trees were reportedly downed, blocking roadways and interfering with rescue operations. Windows and exteriors of casinos and other buildings were ripped away by strong winds. Wind-borne debris included falling tiles and cement blocks from buildings, as well as billboards. Flooding was worst in some of the older portions of downtown Macau, full of narrow streets dating back hundreds of years to the days when it was a Portuguese colony.

Macau relies on Guangdong for much of its power—which was cut off—and while some of the very large casinos had backup generators, many areas remained without power through Thursday. The water supply was also limited, authorities said. The government originally projected Hato would be much less intense, and Macau’s weather forecasting chief subsequently resigned amid growing criticism of the government’s poor disaster response.

AIR Modeled Losses

A crucial component of providing an accurate insured loss estimate is ascertaining the storm’s exact strength at landfall. However, this is a challenging task because there are typically discrepancies in the storm’s reported intensity from various agencies due to satellite-based algorithms, parameter estimation, and averaging times. For example, the Japan Meteorological Agency (JMA) provides 10-minute average sustained wind speeds while the Joint Typhoon Warning Center (JTWC) provides 1-minute average sustained wind speeds.

To produce loss estimates for Typhoon Hato, AIR used track information from the JMA and a formula for relating central pressure to maximum gradient wind speed based on historical storm data for the Northwest Pacific. Central pressure is a more reliable parameter than wind speed for estimating storm intensity, as barometers are more durable than anemometers. Modeled wind speeds and precipitation totals were carefully compared against available observations in order to ensure an accurate representation of observed conditions, and a range of possible scenarios has been provided to account for uncertainty due to a very limited number of available observations.

Based on running these scenarios in the AIR Typhoon Model for China, AIR estimates that industrywide insured losses to onshore properties in mainland China are likely to range between USD 129.3 million (CNY 860.8 million) and USD 223.8 million (CNY 1.49 billion). The wide range in the modeled insured losses reflects uncertainty in the meteorological parameters associated with this event. There is additional uncertainty in the take-up rates (insurance penetration) for much of the region. Note that these estimates do not include damage to property in Hong Kong or Macau.

Typhoon Hato
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