Typhoon damage is a major risk in China and typhoon cover is a compulsory element in all property policies. In June last year Peak Re announced its partnership with the Shanghai Typhoon Institute (STI) to collaborate on research projects related to the tropical cyclone activities over North West Pacific (NWP) basin and South China Sea (SCS). In early June, the STI and Peak Re’s analytics team have jointly issued their first report of the seasonal forecast for the 2016 tropical cyclone activities.
Following the strongest El Niño event in over 40 years in 2015, 2016 is referred as an El Niño decay year. Statistics showed that below normal cyclone activity was observed in most of the decay years but there was no obvious impact on strong typhoon genesis nor landfall to China. Other pre-cursors, such as stronger and more southward sub-tropical high system, positive sea surface temperature (SST) anomaly over East Indian Ocean, and positive inter-hemispherical SST gradient, are forecast to persist until 2016 summer and will further drive the low tropical cyclone genesis.
As of mid-June, there was no numbered event observed in the NWP basin and SCS. A delayed season doesn’t mean a lower risk. Take 1998, another El Nino decay year, as an example, the first numbered event was on 6 July. After that, the occurrence frequency for the rest of the year was higher than normal. 1998 saw a total of 27 numbered events which included 3 in July, 4 in August, 7 in September, 6 in October, 3 in November, and 4 in December. With this in mind, one cannot ignore the probability of having events that impact the countries around NWP basin or SCS frequently in the second half of the year.
Overall however, the total number of cyclones making landfall is foreseen to be below the last 10-years’ average. In August the second report will provide a mid-season review of 2016’s tropical cyclone activities for the remaining season.
A year ago Peak Re announced the partnership with the Shanghai Typhoon Institute (STI) of the China Meteorological Administration to collaborate on research projects related to the North West Pacific basin and South China Sea’s tropical cyclone activities. The STI conducts basic and applied research related to tropical cyclones and has developed and maintained a database of meteorological information specific to cyclone activities in China.
Peak Re has been working closely with the STI in preparing this report, providing input on the type of information and data that are beneficial to the insurance community for assessing its risks. Peak Re’s clients can benefit from STI and Peak Re’s joint expertise and resources for better managing their risk exposure and accumulation. At the same time, they can also use the information for designing more adequate reinsurance cover and thereby better protecting their balance sheet.
As the STI is the only official cyclone institute in China, first hand data and in-depth research findings will be very valuable not only for the insurance industry to be able to better understand typhoon activity trends and mitigate the associated risks, but also for the Chinese Government to use the insights for working on necessary precaution, protection and evacuation plans for the Chinese population, especially in coastal areas. As a result, this may also help to reduce the number of injured and fatalities following the occurrence of a super typhoon.
