A double whammy of storms hit Japan and South Korea recently: Typhoons Maysak and Haishen made landfall within a day of each other.
As a result of these storms, South Korea faced a threat to its $110bn+ of semiconductor and automotive export industries according to the latest real-time information gathered by Adapt Ready’s Risk Intelligence Platform. Our initial newsletter tracked Haishen as making landfall as a Category 4-equivalent hurricane and the infographic was prepared with those paths; by the time it reached South Korea, it had been downgraded to Category 2 so the impacts to the identified companies may not be as severe. Nevertheless, the infographic also highlights the accumulation of risk among these industries.
The two main impacted industries are the $23.1bn Automotive parts exports and the more concerning $94bn semiconductor exports industry which currently ranks as South Korea’s largest export industry. Despite the updated path of Typhoon Haishen, they have impacted operational capacity on some of South Korea’s major corporations; and as per our analysis, the companies most exposed to losses right now are Samsung, Amkor, Hyundai, Ford and General Motors, by virtue of their heavy supply chain reliance on South Korea
In the attached infographic you can clearly see how Maysak’s path ran right through the heart of the semiconductor and auto industries in South Korea. Most insurers are able to know the property damage to direct sites of their customers but the impact on lines such as business interruption within the manufacturing sector is impossible to capture without the right tools to assess interconnected risks. They are unable to know or even estimate their BI/CBI exposure, which is paramount during these times. Some of the interesting insights from our risk intelligence platform include:
- 472 semiconductor companies and 426 automotive final assembly/parts supplier companies were in Maysak’s high impact zone (min wind speeds ~90 Km/h and max wind speeds ~176 Km/h)
- The same numbers increased to 653 semiconductor and 528 automotive companies when the focus is on high impact zones of cyclone Haishen.
- Multiple common tier-1 suppliers were in the impact zones of both the cyclones, potentially leading to supply chain issues to bigger companies like Estra Automotive, General Motors, Hyundai, Samsung and Ford.
- There could be a “double edged” impact to supply chains of raw materials and finished goods, both in automotive and semiconductor industries, causing large exposures.
If you would like more details as to impacts to your specific portfolio in that area or just want to be kept up to date with the real-time impact of the cyclones then please reach out using the details below.
The latest real time information is now available for tropical storm Laura, but can this come to the aid of the ailing energy market?
As storm Laura struck the Gulf of Mexico as a Category 4 storm after undergoing a massive intensification in strength in just 24 hours, the insurance industry, as always in these times, is inundated with predictions of losses and warnings from the likes of AM Best and Moody’s of added stress to the balance sheets of their rated insurance companies, already weakened by Covid-19.
With the availability of new technology and powerful analytics tools now though, there is a way for the industry to react with better, more informed decision making.
Let’s take the ever-suffering Energy market, which over the last few years has been hardening due to an increase in losses and a decrease in premiums, so the use of cutting-edge technology is already pivotal in reducing expense ratios – but can that technology help in real time?
Having the right information at the earliest possible time will massively help companies with their reserving, so what information can we gather right now from this data?
Port Arthur, Texas is home to the largest oil refinery in the US. Over 330 offshore drilling platforms are right in the path of Laura’s peak winds, but not all rigs and refineries are equal. Older platforms (pre-2006) generally have a lower profile and therefore more likely to be affected by the predicted storm swells of over 20 feet and understanding how many of these are in insurers’ portfolios is the first step of the analysis.
- Currently there are 235 older (pre-2006) platforms in the storm affected area.
- The platforms are owned or operated by a handful of companies that have large exposures, including Fieldwood Energy LLC, Cox Operating LLC and Arena Offshore LP.
- It is also worth noting from the data that Fieldwood Energy alone owns or operates 238 fixed offshore platforms and thus has the largest exposure.
Modern, floating platforms are designed to be far more resilient to storm surges but any of the above fixed platforms caught in the storm would add more pressure to their owners.
|Fieldwood Energy LLC||238|
|Cox Operating, LLC||102|
|Arena Offshore, LP||39|
|Sanare Energy Partners||17|
These companies have properties at a greater risk of losses and knowing this allows insurers the opportunity for better reserving and the ability to do that faster also gives a greater understanding of potential losses.
One of the areas that Real time data can be truly beneficial in times like this is in the potential to have preventative action, which leads to faster processing of claims and not to mention identifying the business interruption impact.
Looking at the infographic we can also see the impact to downstream energy production. With production already down 84% in the last two days this is going to put pressure on chemicals, machinery, plastics and rubber manufacturing who may have shortage issues.
The last similar storm that hit this region was Hurricane Rita in 2005, which resulted in $6.4 billion in insured losses
A final point on how underwriting can modernize with this type of data. Traditionally, energy companies have insured their risk exposures on an individual basis, with reliance placed on historical losses to assess risk, usually by considering each class of insurance in isolation.
Premium, market capacity, deductible and insurable limit are the main drivers, with only limited analytical support undertaken to assess placement outcome and pricing or the insurer’s overall portfolio.
This single view of risk doesn’t take into account the true nature of risk, which is far more complex and includes dependencies within and between risk exposures that can now be better understood by combining data with modern analytical capabilities. Is it not time that underwriting used this available data, gained a complete understanding of the interconnected risks in a portfolio and helped to reduce both exposures and costs in the long term over the traditional and more myopic system?
If any companies on this list are in your portfolio, then we have detailed information that may help and are more than happy to share it; so please do not hesitate to get in touch.
Coronavirus COVID-19 is on everyone’s mind. Here’s a sliver of the global impact it can cause, from the shut down of several operations in China, Hubei in particular
Hurricane Dorian, an extremely catastrophic category 5 Atlantic hurricane, caused extensive damage to the aerospace industry, multiple small and medium enterprises and several foreign companies that had operations in the Carolinas.
Cyclone Vayu, a strong tropical cyclone, cause damages mostly in the Indian state of Gujarat. Cargo operations were suspended in all ports in the Gulf of Khambat, interrupting exports to multiple countries.
Cyclone Fani, called as the strongest tropical cyclone to make landfall in India in 20 years, battered India and Bangladesh, and impacted several manufacturing companies and industries. A snapshot of the potential impacts can be seen in our business impacts infographic.
Hurricane Michael, a devastating Category 5 hurricane, barreled into the Florida Panhandle region, and impacted hundreds of companies and industries in the region; especially impacting the Aerospace, Automotive and Chemicals industries.
Typhoon Trami, also known in the Philippines as Typhoon Paeng, was the second typhoon to hit Japan within a month; severely impacting Kyushu, Okinawa and Kochi provinces. A snapshot of industries impacted in these provinces can be seen in our infographics.
Typhoon Mangkhut, also known as Typhoon Ompong in the Philippines caused extensive flooding and damages to South China and the Philippines. The pearl river delta region of China was impacted severely, leading to multiple industries like Automotive, Semiconductors and Toys suffering losses.
Hurricane Florence, the first major hurricane of the 2018 Atlantic hurricane season, caused extensive damage to automotive, chemical and aerospace industries in the Carolinas, in addition to all major ports being closed, and supply chain impacts to multiple companies. A snapshot of the impacts can be seen in our infographics.