Insurer examines lessons of Hurricane Katrina as troubling forecast in noted for Australian weather
With a severe El Nino event forecast and the cyclone season approaching, insurer Allianz has highlighted transport and supply chain interruption as a consequent threat for international and domestic transport and logistics.
The global insurer’s Allianz Global Corporate & Specialty (AGCS) section has marked the recent 10th anniversary of Hurricane Katrina in the US with an analysis of storm-related losses, trends and global businesses preparedness for such events in future – Hurricane Katrina 10: Catastrophe management and global windstorm peril review.
But its local operation points to issues here and in Asia that have the potential to cause financial hardship, particularly for the unprepared.
“The general consensus of scientists is for an increased severity rather than frequency of windstorm events, such as Australia has experienced this year,” Allianz Risk Consulting Pacific regional manager Iain Ritchie says.
“Further, with the current growing El Nino in the Pacific, climatologists are predicting even more intense weather phenomena in the immediate future, which requires risk assessment and planning.”
Ritchie adds that “not only is pre- and post-loss risk management crucial in mitigating the impact of increasing windstorm losses, risk management should also focus on loss minimisation during windstorm events.
“Business continuity planning must also incorporate direct as well as indirect supply chain exposures to be effective.”
AGCS Pacific CEO Holger Schaefer takes up that point, noting critical supply chains for Australia stretch into Asia.
“Fifty per cent of the world’s top 10 cities in terms of assets exposed to windstorm are in industrial parks in Asia and this is predicted to increase to 80 per cent by 2070,” Schaefer says.
“These cities form an integral part of the global supply chain, particularly for businesses based in the Pacific region, and thus requires careful assessment of the windstorm supply chain risks for such companies.”
AGCS identifies port areas as particularly vulnerable.
Claims analysis shows the maritime industry is highly-exposed to such losses, accounting for 60 per cent of windstorms claims analysed by number compared with 30 per cent for property.
“Claims can also be incurred due to water ingress into ships’ cargo holds damaging the cargo,” AGCS global head of marine risk consulting Rahul Khanna says.
“Storms can also damage or destroy ports or coastal infrastructure, including warehouses and stored cargo, cranes, quaysides, terminals, buoys and sheds.”
While the US takes the lion’s share of business claims of more than Euro100,000 (A$160,000) each, with 208, Australia comes in fifth with the United Kingdom at 12 claims.
This is just below Japan with 14 and above China with eight.
The most damaging Australian cyclone this decade was Yasi in 2011, which destroyed road and rail links in Queensland, disrupted agricultural supply chains severely and cost insurers $1.86 billion in payouts on 128,875 wind and flood claims.
Yasi, however, occurred during a La Nina cycle.
More recently, April’s four-day storm in New South Wales cost $922 million, while last November’s Brisbane hailstorm came in at $1.34 billion.
The full report can be found here.