According to A.M. Best, rated nonlife insurers in Macau will be able to withstand the Typhoon Hato losses with moderate impact on earnings but limited effect on their financial strength.
Typhoon Hato made landfall just north of Macau, an Asian casino hub. The typhoon is the strongest storm in 53 years causing a huge amount of damage to the city from strong winds and flooding, as well as leaving major districts without electricity for at least 24 hours.
While it is too early to predict the total insured loss to the industry, A.M. Best is expecting the storm to have a limited rating impact, given their conservative reinsurance arrangements, low penetration of natural catastrophe coverage on personal lines and robust capitalisation.
It is expected that the majority of the gross losses will come from commercial property and business interruption losses. However, most of these risks are ceded to the international reinsurance market. Personal insurance awareness is very low, as only a single digit of motor policies are comprehensive policies according to Macau Insurers’ Association, and the vast majority of the residential property insurance are fire only policies that do not cover water damage and flood.
However, in Hong Kong, market analysts put the economic cost caused by Hato to the city at anywhere between HK$4bn (US$512mn) and HK$8bn. The stock market in the territory was paralysed, most businesses closed, flights cancelled and public transport suspended, reported South China Morning Post.