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Typhoon Hagibis to trigger 'large volume' of commercial insurance claims

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Typhoon Hagibis to trigger 'large volume' of commercial insurance claims

Typhoon Hagibis, which hit Japan on Oct. 12, "is expected to produce a large volume of commercial insurance claims" stemming from wind, rain, flooding and storm surge, according to global loss adjuster Sedgwick.

In addition to property and business interruption losses, Sedgwick also expects contingent business interruption losses because of disruption to supply chains. As such, the company believes the effects of the storm will be felt regionally and internationally.

Contingent business interruption covers losses incurred by a company because of disruption to its suppliers.

Hagibis made landfall as a Category 2 storm near the Izu peninsula to the south of Tokyo, causing heavy flooding. The storm has killed more than 30 people and left 15 missing, and triggered a temporary shutdown of Tokyo, the Financial Times reported.

In an Oct. 13 update, Sedgwick said Hagibis moved north after landfall, "significantly impacting" the Kanagawa, Chiba, Nagano, Gunma and Fukushima prefectures. The loss adjuster said there was "significant flooding" in all affected prefectures, and that several rivers had breached their banks or levees, "flooding thousands of homes and businesses."

The main industries in the worst-hit areas include electronics and telecommunications component manufacturing, Sedgwick said. Many factories are expected to be critical to supply chains for motor vehicles and telecommunications devices.

"These impacts will likely be felt not only in Japan but also regionally and will involve major overseas based multinationals," the Sedgwick update said.

According to Sedgwick, the most significant damage includes floodwater damage to 10 bullet trains in the Nagano prefecture; tornado damage, mainly to homes, in Chiba; infrastructure damage; and "massive and widespread" floodwater inundation of residential areas.

Hagibis is the third typhoon to hit Japan in 2019. Typhoon Faxai struck the country in early September, causing between $5 billion and $9 billion of insured losses, according to a Sept. 26 estimate from risk modeling firm RMS.

Japan also suffered two costly typhoons — Trami and Jebi — in 2018. Jebi in particular has been troublesome for insurers and reinsurers because claims have been far worse than first thought. Industry-wide Jebi claims have increased to between $14 billion and $16 billion from initial estimates of between $3 billion and $7 billion.