Typhoon Hato will have only a moderate impact on the earnings of rated non-life insurers in Macau, and a limited effect on their financial strength, according to A.M. Best.
On Aug. 23, 2017, Typhoon Hato (Category 2 on the Saffir-Simpson Scale) made landfall just north of Macau, an Asian casino hub, said the ratings agency. It was the strongest storm to hit the area in 53 years, causing massive damage to the city from strong wind and flooding, as well as leaving major districts without electricity for 24 hours.
While it is premature to predict the total insured loss to the industry, A.M. Best expects that the storm will have limited rating impact given their conservative reinsurance arrangements, low penetration of natural catastrophe coverage on personal lines and robust capitalization.
It is expected that the majority of the gross losses will come from commercial property and business interruption losses. However, most of these risks (especially the casino risks) are ceded to the international reinsurance market.
A.M. Best explained that tersonal insurance awareness is very low, as only a single digit of motor policies are comprehensive policies according to Macau Insurers’ Association, and a vast majority of the residential property insurance are fire only policies that do not cover water damage and flood.
Source: A.M. Best
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