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<\/div>\nThe recent devastating floods following Super Typhoon Saola in Hong Kong and other parts of China may add further pressure to the upcoming reinsurance renewals in January, according to an AM Best commentary.<\/p>\n
The overall impact of the rainstorm is likely to be more of an earnings event for insurance companies than a material hit to capital adequacy, said the report titled \u201cHong Kong 1-in-500 Year Flood Likely to Have an Earnings Impact.\u201d<\/p>\n
Describing the event on Sept. 7-8, 2023, AM Best said the major rainstorm hit Hong Hong and the Pearl River Delta area (including China\u2019s Guangdong Province and Macau), which dropped a quarter of Hong Kong\u2019s annual rainfall total in 24 hours \u2013 more than 600 millimetres \u2013 or 23.6 inches. The storm was referenced as a 1-in-500-year event.<\/p>\n
Hong Kong Sees Heaviest Rainfall on Record; Insurance Claims Could Exceed $100M<\/a><\/strong><\/p>\n The gross losses on property and auto lines will not be quite as severe but could come close to rivaling the HK$3.1 billion (US$400 million) in losses brought by Typhoon Mangkhut in 2018, the report confirmed.<\/p>\n Fifteen insurance companies account for roughly 51% of the HK$18.9 billion (US$2.4 billion) in gross premiums in the Hong Kong market for the two lines \u2013 property and motor \u2013 combined, said AM Best, adding that they account for 67% on a net basis based on provisional fourth quarter 2022 annual data from the Hong Kong Insurance Authority.<\/p>\n \u201cProperty damage accounts for 13% of total general insurance net premiums (21% on a gross basis), while motor damage constitutes over 10% on a net basis (8% gross). Comprehensive motor coverage, which would cover the damage from flooding, accounts for a slight majority of motor premium over third party, which would not cover damages from flooding,\u201d the report said.<\/p>\n The report noted that these losses could add further pressure during the upcoming reinsurance renewals, in what is already a hard market. \u201cBased on fourth-quarter 2022 provisional data, net premiums accounted for 40% of gross property damage premiums, which could increase if reinsurance pricing becomes too costly for some smaller companies or if some larger players decide to take on more risk.\u201d<\/p>\n Source: AM Best<\/em><\/p>\n Photograph: A shopping mall is flooded following heavy rainstorms in Hong Kong, Friday, Sept. 8, 2023. Rain pouring onto Hong Kong and southern China overnight flooded city streets and some subway stations, halting transportation and forcing schools to close. (AP Photo\/Louise Delmotte)<\/p>\n Topics<\/span> Carriers<\/a> Profit Loss<\/a> Flood<\/a> Reinsurance<\/a> <\/p>\n<\/p><\/div>\n Was this article valuable?<\/p>\n<\/p><\/div>\n