Typhoon Chan-hom

Post Landfall 1 | Summary
Posting Date: July 15, 2015, 2:00:00 PM

AIR Worldwide estimates that insured losses in China from Typhoon Chan-hom are likely to range between CNY 255 million and CNY 2.25 billion, and total insurable losses are likely to range between CNY 1.2 billion and CNY 9.75 billion. 

AIR’s insured loss estimates include take-up rates that vary by line of business and province. Note, however, that there is considerable uncertainty around these take-up rates. Note, too, that AIR’s insurable loss estimates include all insurance-eligible properties regardless of actual coverage. Certain building types, such as traditional adobe, mud, or thatch construction, are extremely vulnerable to natural perils and are consequently unlikely to be insured.

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AIR’s industry insured loss estimates reflect:

• Insured physical damage to onshore property (residential, commercial, and Construction All Risks/Erection All Risks), for both structures and their contents due to wind and precipitation-induced flooding in China
• AIR’s assumed take-up rates—that is, the percentage of properties in 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, 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
• Builder's Risk
• Demand surge
• Other non-modeled losses

Storm Summary

Typhoon Chan-hom made landfall in the coastal city of Zhoushan, China, on July 11, 2015, at 4:40 p.m. local time as a Category 2 storm, making it one of the strongest to hit the region this year. Zhoushan sits across from Shanghai on Hangzhou Bay, about 130 km to its south-southeast. At the time of landfall, maximum sustained winds reached 45 m/s with a central pressure of 960 mb, which was slightly less intense than its peak strength of 935 mb 24 hours prior. The Shanghai airport reported sustained wind speeds of 64 km/h, with gusts to 90 km/h. Some reports suggest this could be the strongest July typhoon to hit Zhejiang Province since 1949.

Chan-hom was moving north-northeast at a rate of 20 km/h when it glanced the coast of China, moving through Shandong Province on July 12 and then quickly swerving out to the Yellow Sea. It then made a second landfall in North Korea on July 12 at approximately 3 a.m. local time as a tropical storm after weakening due to significantly cooler sea surface temperatures. Sustained wind speeds in North Korea were reported between 80 km/h and 88 km/h.

Reported Impacts

Heavy downpours doused Shanghai and the provinces of Anhui and Fujian, flooding roads and fields. The China Meteorological Administration (CMA) reported close to 40 cm of precipitation in the city of Lai'ao Village in Sanmen County south of Shanghai. Landslides washed away more than 5,000 cubic meters of land in Ningbo city, and dozens of water gates have been opened to facilitate flood drainage.

According to official estimates released July 15 by the Zhejiang government, economic losses in the province alone are estimated at CNY 8.86 billion, while total economic losses are estimated at CNY 9.1 billion. More than 1,000 houses are reported to have collapsed in China. Industries most impacted include agriculture, with reports of more than 200,000 hectares affected by Chan-hom, and transportation, after thousands of flights and trains were canceled due to weather conditions. The storm affected 2.8 million people in 520 villages and towns, spanning 69 counties and nine cities of Zhejiang Province.

Evacuations prior to landfall included about 1.2 million people from coastal areas of Zhejiang and more than 56,000 in neighboring Jiangsu. Preparations also included calling the entire fishing fleet back to port. Power and telecommunications were interrupted. Because Shanghai was on the weak side of the storm system, however, wind damage was mitigated.

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 Chan-hom, 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 industry-wide insured losses are likely to range between CNY 255 million and CNY 2.25 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.

Post Landfall 1 | Downloads
Posting Date: July 15, 2015, 2:00:00 PM