Swiss Re launches Hong Kong’s first insurance policy for typhoon signal No.8 losses
New product, aimed at businesses likely to lose money during a severe tropical storm, pays out automatically if a No.8 warning is issued
The first insurance policy that specifically provides cover in the event of a typhoon signal No.8 was launched in Hong Kong on Tuesday.
The product, offered by reinsurance company Swiss Re Corporate Solutions, pays out policyholders automatically if a T8 signal or above is issued by the Hong Kong observatory. Aimed primarily at local businesses likely to suffer financial loss during a T8, the city’s third highest storm warning, the new policy fills what Swiss Re said was a gap in traditional insurance products.
Unlike traditional policies that require insurers to investigate and inspect the actual physical damage sustained by claimants, the coverage would become effective as soon as the No. 8 signal is hoisted, according to Jacky Chan, head of casualty and sales North Asia Swiss Re Corporate Solutions.
We have seen a shift in insurance policies, from covering physical damage to focus more on revenue losses due to natural factors such as a typhoon
“We have seen a shift in insurance policies, from mainly covering physical damage to focus more on the revenue losses clients suffer due to natural factors such as a typhoon,” he said.
Dubbed Insur8, the new product provides a pre-agreed payout amount based on the Hong Kong Observatory warning signal and could range from several hundreds to millions of Hong Kong dollars depending on which industry the client is in, according to Swiss Re.
Vulnerable to typhoons during the summer months, Hong Kong has regulations in place that employees should not go to work when typhoon warning Signal No. 8 or above is issued. Many activities in the city tend to grind to a halt, causing revenue losses to businesses such as hotels, restaurants, financial institutions and shipping companies.
A No. 8 storm signal means winds averaging at least 63 km/h are expected, with gusts possibly in excess of 180 km/h. The last time it was raised was on June 12 when Tropical Cyclone Merbok descended on the city. Although causing minimal physical damage, workers across Hong Kong were sent home as businesses and financial markets closed early for the day.
While available to all industries in Hong Kong, the hospitality, catering, and financial sectors should be especially interested in this product, according to Dylan Bryant, CEO North Asia at Swiss Re Corporate Solutions.