General Insurance Article - PWC comments on Typhoon Haiyan

 From what we are seeing this morning, Typhoon Haiyan is clearly one of the worst typhoons to have hit the Philippines this year. Although it is still too early to tell the economic impact of the typhoon, the sad fact is that the social and economic impact of catastrophes on the Philippines is very large but the insured recoveries are very small. The Philippines has one of the lowest insurance penetration rates in the world as measured by premiums as a percentage of GDP - typically about 1% - and therefore we would not expect the level of insurance losses to be anywhere near as significant as the economic loss. For example, Typhoon Bopha that hit the Philippines last year - and also appears to be as severe - had reported economic losses of US$1 billion (£600 million) and global insured losses of less than £50m."

 Dom del Re, catastrophe expert at PwC, comments:

 "The reinsurance classes of business most likely to be impacted are commercial and industrial property, and some marine classes. For growing global reinsurers, this massive category 5 typhoon is a reminder of the risk the country is exposed to. The future revenue potential is attractive and premium has grown as much as 12% in past years, but catastrophe risk management will be a key component of any growth strategy. Even allowing for the events in the Philippines this has been a benign year for the global catastrophe reinsurance markets and if this activity continues to the end of the year, this will have a downward pressure on rates."