Hong Kong flooding that’s been described as a 1-in-500-year event may have implications for the upcoming reinsurance renewals, AM Best says.
Remnants of Typhoon Haikui bought torrential rain to Hong Kong and the Pearl River Delta area including China’s Guangdong Province and Macau earlier this month.
Hong Kong’s weather station at the observatory headquarters recorded more than 158mm of rain between 11pm and midnight on a Thursday night, the highest hourly total since records began in 1884.
AM Best says the gross loss of the flooding may come close to the $HK3.1 billion ($616 million) in losses that Typhoon Mangkhut caused in 2018.
“These losses could further pressure the upcoming reinsurance renewals, in what has already been a hard market the last few years,” it says.
Insurance losses will likely stem mainly from property losses, with some motor losses, while good risk management of the city’s drainage systems and contingency planning should help minimise impacts, according to the commentary.
The overall impact of the “black rainstorm” is likely to be more of an earnings event, rather than a material hit to capital adequacy.
The floods came days after Hong Kong was lashed by fierce winds from Super Typhoon Saola, the strongest typhoon to hit the city in five years.