Reinsurance News

Cyclone Amphan’s $15bn impact mostly uninsured: Aon

10th June 2020 - Author: Matt Sheehan

Analysts at re/insurance broker Aon estimate that Cyclone Amphan will drive $15 billion of economic losses across India, Bangladesh and Sri Lanka, although most of the damage is expected to be uninsured.

The cyclone made landfall in coastal areas on May 20th as a Category 3 storm with winds gusting up to 185km/h (115mph) and waves as high as 15ft.

Governments of India and Bangladesh estimated that nearly three million homes had been damaged or destroyed by Amphan, along with vast areas of agriculture and infrastructure.

In West Bengal, India, economic losses are estimated to exceed INR1.0 trillion (USD13.5 billion), while officials in Bangladesh noted damage costs nearing BDT127 billion (USD1.5 billion).

Previous estimates suggested that the insured loss in India may be as low as Rs 350 crore ($47 million).

The analysis from Aon came as part of the broker’s monthly catastrophe report, which also looked at the severe weather outbreaks that occurred across the US in May.

Here, insured losses are expected to cover a “significant proportion” of the minimum $4 billion economic cost, with one particularly severe outbreak driving economic losses above $975 million, of which 75% is thought to be insured.

“The vulnerabilities of infrastructure were amplified by Cyclone Amphan’s widespread effects in India and Bangladesh during May,” said Michal Lörinc, Catastrophe Analyst within Aon’s Impact Forecasting team.

“The storm brought extensive coastal and inland flooding, in addition to hurricane-force wind gusts, which put a further spotlight on the need for future investments in modernizing coastal barriers, embankments, and the electrical grid in storm-prone areas around the world. The use of catastrophe models to incorporate future storm scenarios is one useful option to use as a guide for investment planning.”

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