Hong Kong insurance: ‘Once-in-500-years’ September rainstorm triggered US$244 million of claims, second only to Mangkhut-linked losses

The city’s 104 general insurers received a combined HK$1.54 billion worth of claims for damage done by the devastating black rainstorm in September
Claims related to property damage represented 86 per cent of claims related to the two extreme weather events in September

Insurance

Enoch Yiu

Published: 6:00am, 5 Dec 2023

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Hong Kong’s insurance industry received a total of HK$1.9 billion (US$243.6 million) in claims related to damage caused by a devastating black rainstorm and Typhoon Saola in September, making them among the highest claims on record.

The city’s 104 general insurers received a combined HK$1.54 billion worth of claims filed by the owners of cars, businesses and property for the damage done by the black rainstorm on September 7 and 8, according to data from the Insurance Authority released on Monday. Saola separately prompted HK$361 million of claims on September 1.

The rainstorm triggered the second-highest in claims, behind only the record HK$3.1 billion paid out in 2018 in the wake of Typhoon Mangkhut. In comparison, only HK$858 million was paid out on Typhoon Hato in 2017, while the outbreak of Severe Acute Respiratory Syndrome in 2003 involved only HK$325 million of claims.

The September rainstorm, which Hong Kong officials described as a “once-in-500-years” event, left one person dead and 117 injured, with many cars, shopping centres and properties damaged by flooding.

Temple Mall North, a shopping centre in Hong Kong’s Wong Tai Sin neighbourhood was hit particularly hard. Rainwater flooded its basement, forcing it to close the whole floor.

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More than 140 injured as Hong Kong faces 'once-in-500 years' downpour

“These figures serve as a stark reminder that having adequate insurance coverage is of utmost importance for individuals and communities alike,” said Sally Wan, chairwoman of the general insurance council of the Hong Kong Federation of Insurers (HKFI).

“To bridge the protection gaps and mitigate potential losses, members of the public should be proactive in taking out sufficient insurance and regularly reviewing [their policies],” she said in a statement. “The HKFI remains committed to raising awareness about the significance of insurance in safeguarding properties and communities.”

Claims related to property damage represented 86 per cent of the amount related to the two extreme weather events in September. Nine per cent of the claims were for motor insurance, and the rest was travel insurance, business interruption, and employees’ compensation, the official report showed.

Eric Hui, CEO of Zurich Insurance in Hong Kong, said it was no surprise property insurance generated the most claims, as many shopping malls and property owners take out coverage for their assets against flooding, fire and other types of damage.

“In comparison, motor insurance claims are not that high as many car owners only bought the mandatory third-party liability insurance, which does not cover flooding,” Hui said.

“Heavy rainstorms are a good reminder for car owners to pay attention to their car’s insurance coverage. If they had bought comprehensive cover for their cars damaged by flooding, they could get full compensation to buy a new car.”

MM Lee, acting head of general business at the Insurance Authority, urged the public to be aware of the benefits of insurance coverage against extreme weather risks.

“With the alarming surge in both the frequency and intensity of extreme weather events, we must not underestimate the devastating impact they impose on our economy and community,” Lee said.

“Insurance can play an important role as a safety net in providing urgent relief and mitigating losses for businesses and individuals in the face of climate hazards. Unleashing the social value of insurance can help support recovery efforts and enhance our community resilience.”

Globally, insurance payouts in the wake of natural catastrophes came to US$50 billion in the first half of this year, according to a report by the reinsurance giant Swiss Re in August.

Payouts related to thunderstorms accounted for 70 per cent of the total, including claims made in Florida and California, while February’s devastating earthquake in Turkey and Syria also generated high payouts, the report said.

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