Super Japan Typhoon Could Cause An $18 Billion Insured Loss

With the typhoon season in full swing, a catastrophe modeling firm estimated Japan would sustain an insured loss of more than $18 billion if the 1959 Super Typhoon Vera hit today.

Newark, Calif.-based Risk Management Solutions said wind damage alone from a repeat of that storm’s blow to the island’s southern coast could hit the $18 billion mark.

The estimated insured losses from wind damage could range from between $14.5 billion and $18 billion for residential, commercial and industrial properties, RMS said in a report.

Typhoon Vera, also known as Typhoon Isewan, made landfall on Sept. 26, 1959, impacting nearly all of Japan due to the strength and extent of its wind field and storm surge footprint, according to RMS.

Recounting the damage then, the firm said that much of the low-lying land around Japan’s Ise Bay was inundated with flood waters, which persisted in some areas for more than four months.

Vera destroyed thousands of homes, leaving more than 5,000 people dead and injuring an additional 39,000 individuals. It is the deadliest typhoon to strike Japan in recent history and ranks among the highest number of casualties from Japanese natural disasters in the 20th century, RMS related.

Insurance played a minimal role in aiding recovery efforts from the 1959 storm, said RMS, whereas a considerable portion of total losses today would be covered by the insurance industry.

RMS noted that the significance of Super Typhoon Vera is such that the Japanese Financial Services Agency (FSA) specifies that insurers providing coverage in Japan must use the Super Typhoon Vera event to assess their solvency levels.

Using an advanced flood simulation developed by the Japanese government, RMS said in the research report that storm surge damage from the worst-case scenario in Ise Bay would overwhelm the region, severely damaging exposed properties as well as disrupting the transportation networks, harbor functions and other infrastructure built in the region since the 1959 storm.

“In today’s Japanese insurance market, storm surge damage is included as an extension to wind coverage for residential and commercial lines of business,” commented Domenico del Re, director of product management at RMS.

He said a simulation of the 1959 typhoon event shows that losses from storm surge damage to residential properties could add up to $6 billion to the catastrophic wind losses.

While the extent of storm surge flooding in a recurrence of Vera would be significantly reduced by the existing flood defenses, the continuing issue of potentially higher sea levels due to climate change increases the threat of storm surge damage in Ise Bay, as well as other bays in Japan, RMS reported.

Insured property losses caused by wind damage are based on the RMS Japan Typhoon Model.