Typhoon Nanmadol industry loss potential likened to Jebi or Hagibis

Typhoon Nanmadol is a potentially significant Japanese industry loss threat for insurance and reinsurance market interests, while meteorologists are warning it could be more impactful than recent damaging typhoon’s Jebi and Hagibis.

Typhoon Nanmadol is set to strike southwest Japan on Sunday with sustained winds of 110 mph and higher, plus gusts of more than 140 mph, according to some forecasts.

The Japanese meteorological agency (JMA) has now classified typhoon Nanmadol as “violent” as the super typhoon strength storm may not weaken quite as much as had been thought, before it makes landfall in Kyushu.

A special warning has now been issued, the first time this has happened outside of Okinawa where typhoon’s are seen to maintain their wind speeds more over warmer waters.

The JMA is forecasting only slight weakening before typhoon Nanmadol hits Kyushu, raising the potential for significant impacts across some of its largest cities.

At a news conference, a JMA official has likened the damage potential of typhoon Nanmadol to the two most recent impactful typhoons to strike Japan, Jebi and Hagibis.

2018’s Jebi and 2019’s Hagibis both caused significant insurance and reinsurance market losses, in the ten billion plus dollar ranges.

For Kyushu, Nanmadol could have even worse impacts than those two storms, the official warned.

At its current expected landfall intensity, typhoon Nanmadol could easily be in the top-ten strongest storms to impact Japan on record.

After it makes landfall in the southwest region of Japan, typhoon Nanmadol is forecast to turn more easterly direction and track the length of Japan, weakening as it goes. Click the image below for a larger version.

Sea surface temperatures remain conducive for typhoon Nanmadol to hold onto much of its strength as it approaches the Japanese island of Kyushu.

Forecasts suggest up to 500mm of rainfall in the Kyushu region, sufficient for significant flooding and landslides, while wind speeds could be higher than anticipated according to the JMA, with the potential for Category 3 strength winds on landfall and a slower than anticipated weakening due to typhoon Nanmadol’s size.

With major cities, industrial regions and ports all in the path of the typhoon through Kyushu and beyond as it tracks through Japan, there could be significant business disruption potential, as well as direct property damage.

Insurance and reinsurance market sources are watching typhoon Nanmadol, as it has the potential to deliver a relatively significant industry loss, if it continues to look like striking the Japanese main islands with winds of around Category 3 strength.

Andrew Siffert, Senior Meteorologist at insurance and reinsurance broker BMS commented, “Super Typhoon Nanmadol is predicted to strike Japan with 125 mph category 3 winds in the next 48 hours. This is looking like a devasting blow for Japan as Nanmodol tracks are northwest along the entire length of Japan’s mainland.

“This will likely be a pretty big news event for the worldwide insurance industry next week.”

Insurance and reinsurance broker Aon said it expected “non-negligible damages” from typhoon Nanmadol’s track across Japan.

Japan is facing a difficult few days with typhoon Nanmadol, with the potential for impactful wind and rains, and hundreds of thousands being told to evacuate as the storm approaches.

It’s worth noting that Japanese typhoon risk is a reasonably large exposure for the insurance-linked securities (ILS) market, in both catastrophe bond and collateralised reinsurance form.

With a number of Japanese typhoon cat bonds also covering water driven impacts from rain and surge, as well as wind damage.

So ILS fund managers will be watching this typhoon closely too as it nears landfall tomorrow.

Update, Sunday 18th Sept, 09:00 BST:

Typhoon Nanmadol took a more direct northerly turn towards Kyushu overnight, meaning the storm has not weakened as much as anticipated and raising the chances of a Category 3 landfall event.

As Nanmadol makes its final approach to landfall the JMA warns of the potential for wind gusts of 250 km/h or higher (around 150mph).

In an update, broker Aon’s Impact Forecasting team explained:

Typhoon Nanmadol, which was downgraded from super typhoon at 11:00 PM local time on September 17, had taken on a more northerly course than initially forecast making its landfall imminent in the next few hours to evening on Kagoshima prefecture, the southern tip of Kyushu. Satellite imagery revealed a large banded clouded eyewall, but low-level eye remained well defined through radar data. At present, the storm is packing one-minute maximum sustained winds at 195 kph (120 mph), and with the shorter distance to land, it is likely to pass Kagoshima as a Category-3 equivalent storm. Landfall is possible in the small Yakushima Island within the next hour based on its current trajectory. A main landfall is expected at the southern end of the Kagoshima mainland in the late afternoon, following that it will skirt the west coasts of southern Kyushu to a point just south of Sasebo, Nagasaki, where it rounds the ridge axis and turns sharply northeast. Typhoon Nanmadol is forecast to track through most parts of the Japan archipelago, but gradually weakening under land interactions. At 36 to 48 hours later, a cold front and upper-level trough moving across the Sea of Japan will swiftly weaken the system.

The Japan Meteorological Agency activated a rare level 5 alert for the Kagoshima region on the evening of September 17. This was the first time the highest warning was issued outside of the Okinawa region since the current system started in 2013. Highest evacuation orders were in effect for no fewer than 66,000 people in Kagoshima, and level-4 evacuation orders were put in place also for around 2.9 million people living in Kagoshima, Kumamoto, and Miyazaki prefectures. Kyushu Railway Co halted train services and airlines in the southern region cancelled hundreds of flights since Saturday. At present, the highest sustained wind speed of 82 kph (51 mph) was recorded in Miyazaki prefecture. More than 25,000 households were already without power by the morning of September 18.

Update, Sunday 18th Sept, 13:00 BST:

It appears typhoon Nanmadol’s core became degraded as it neared landfall. Reports suggest the strongest sustained winds on landfall were of a low Category 2 strength at highest, perhaps lessening the industry loss threat a little.

However, rainfall is a significant issue, with storm totals of 700mm or more anticipated for parts of Kyushu and flooding expected across a swathe of Japan as Nanmadol moves north and east.