China’s Natural Hazards: China’s Natural Hazards: An Introduction An Introduction

Natural Hazards in China TransRe White Paper 0 1 Natural Hazards in ChinaSep t TeransRembe rWhite 20 1 Paper4 1 Natural Hazards in China | TransRe White Paper by James Rohman | September 2014

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Figure 1. a) China’s population by province, given data in the 2010 Chinese Census. b) Percentage population change, from 2000 to 2010, given census data.

Figure 1. a) China’s population by province, givena data in the 2010 Chinese Census. b) Percentage b population change, from 2000 to 2010, given Census data.

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ion change, from 2000 to 2010, given Census data.

Figure 2. a) China’s GDP by province, given data in the 2010 Chinese Census. b) Percentage GDP change, from 2000 to 2010, given Census data. 1

Natural Hazards in China | TransRe White Paper Figure 2. a) China’s GDP by province, given data in the 2010 Chinese Census. b) Percentage GDP change, from 2000 to 2010, given Census data.

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Natural Hazards in China TransRe White Paper 2 Natural Hazards in China | TransRe White Paper

Introduction Worldwide economic losses from natural catastrophes were $140 billion in 2013 (events including Australia Drought, US Wildfire and Egyptian Snow), of which 68% was uninsured. These figures are down from 2011 (Texas IntroductionDrought, Thailand Floods, Hurricane Irene), when 72% of the $380 billion economic losses were uninsured. While recent total losses from natural Worldwidecatastrophes economic are losses below from average natural ($190 catastrophes billion), they were represent $140 billion major in losses 2013 for(events insurers, including and significant Australia Droughtopportunities, US Wildfire for global and insurance Egyptian growth.Snow), of which 68% was uninsured. These figures are down from 2011 (Texas Drought,This Thailand growth potentialFloods, Hurricaneis most apparent Irene), whenin Asia, 72% which of the contributed $380 billion 58% of economic2013 lossesʼs uninsured were uninsuredlosses, with. While events recent such total as Typhoonlosses from Haiyan natural and the catastrophesIndian cold are wavebelow. Moreaverage specifically, ($190 billion) within, they Asia, represent China has major the lossesworldʼs for insurers,largest andpopulation, significant one opportunities of the world ʼfors largest global and insurance most vibrant growth. economies, and is exposed to a plethora of natural catastrophes. It is extremely This growthimportant potential that further is most research apparent is inperformed Asia, which to improve contributed the ability58% of of the 2013ʼsgovernment uninsured lossesplanners,, with (re)insurers events such, businesses as Typhoon and Haiyan citizens and to thebetter Indianunderstand cold wave. theMore impact specifically, of natural within disasters, Asia, China and to has calibrate the world mitigationʼs plans. largest population, one of the worldʼs largest and most vibrant economies, and isChina exposed is experiencing to a plethora rapid of natural industrialization catastrophes. and I turbanization is extremely of the Historically, only 5% of economic importantpopulation. that further A number research of these is performed major population to improve centers the ability are ofcoastal the cities; loss from natural catastrophes has governmentexposing planners, them to (re)insurers potential events, businesses such as and rising citizens sea levels to better, flooding and been recovered from insurers in understandincreasingly the impact frequent of natural and severe disasters, wind andstorms. to calibrate mitigation plans. China, whereas 20-40% is ChinaAt is theexperiencing same time, rapid these industrialization developing urban and areasurbanization are benefiting of the from Historically,recovered only in 5% more of economicestablished population.significant A number investments of these in majorinfrastructure population and centers other projects are coastal in transport cities; (high loss frommarkets. natural catastrophes has exposingspeed them rail, to highways potential andevents airports) such ,as power rising (generation sea levels, andflooding transmission) and and been recovered from insurers in increasinglywater (storage, frequent treatmentand severe and wind distribution).storms. Such capital investments are China, whereas 20-40% is exposed to complicated delays and damage from natural catastrophes. recovered in more established At the same time, these developing urban areas are benefiting from markets. significantAs the investments cities have inexpanded, infrastructure so has and the other need projects to feed in them. transport Creating (high speedc onservativerail, highways water and managementairports), power systems (generation and diversification and transmission) away andfrom flood water plains(storage, are treatmenttwo of the andsignificant distribution). farming Such and capital agricultur investmentsal challenges are that exposedChina to complicatedfaces. delays and damage from natural catastrophes.

As theAs cities public have perceptions expanded, of so risk has and the insurance need to feedchange, them. and Creating as insurance conservativepenetration water increases management in developing systems marketsand diversification, understanding away the from base flood plainselements are two of of the accurate significant risk assessmentfarming and andagricultur priceal adequacy challenges becomes that ever Chinamore faces. important.

As publicOne perceptions paper cannot of coverrisk and all insuranceaspects of change, natural catastrophes.and as insurance Instead we offer penetrationa general increases overview in developingof the major markets risks in, Chinaunderstanding: an introduction the base to the science elementsbehind of accurate typhoons, risk monsoons, assessment winter and price storms, adequacy drought becomes and earthquakes, ever more andimportant. introduce some of the implications for local insurers.

One paperThese cannot are not cover the onlyall aspects disasters of naturathat mayl catastrophes. strike – China Instead is also we exposed offer to a generalbrushfires, overview hail, of landslidesthe major risksand volcanoesin China: an, many introduction of which to will the be science covered in 2 behind subsequent typhoons, papers monsoons,. winter storms, drought and earthquakes, Natural Hazards in China | TransRe White Paperand introduce some of the implications for local insurers. TransRe is in the business of evaluating and managing risk. Our task is to understand the links between natural disasters, to weigh their correlations and to pass our analysis and experience to our customers. 2

Natural Hazards in China TransRe White Paper 1 Natural Hazards in China | TransRe White Paper Typhoons – The Science

Unlike any other ocean basin, the Western North Pacific Basin is vulnerable to tropical cyclone genesis throughout all 12 months of the year. Tropical cyclone genesis is, therefore, higher in the Western North Pacific Basin than any other ocean basin.

Storms that develop and strengthen to tropical storm or typhoon strength are more likely to occur from June to November, when the six main requirements for typhoon formation are more prone to align: warm sea surface temperatures (SSTs), enough Coriolis force to develop a low pressure center, atmospheric instability, low vertical wind shear, high humidity in the What is ENSO? lower-to-middle troposphere, and a pre-existing low level disturbance.

The El Niño Southern Oscillation As with tropical cyclones in every ocean basin, Western North Pacific (ENSO) is the 3-5 year oscillation typhoon frequency, intensity and path are dictated by large-scale climate oscillations, namely the El Niño Southern Oscillation (ENSO) and the Quasi- between anomalously warm (El Niño) Biennial Oscillation (QBO). and cold (La Niña) bands of ocean water dominating the Pacific Ocean. El Niño/La Niña and Typhoons The pools of cold and warm water act as energy stores that influence ENSO oscillates between two phases: the anomalously warm El Niño phase, weather on a global scale, and the anomalously cold La Niña phase. particularly near the Western Pacific. Countless studies have found that in El Niño years, tropical cyclones have longer life cycles and become more intense storms, with a greater chance of category 3-5 storms and lower chance of smaller storms

What is QBO? Conversely, in La Niña years, tropical cyclones have shorter life cycles and tend to be less intense storms. The quasi-biennial oscillation (QBO) is a slow moving pattern (average Over the past 50 years, the average number of named storms in El Niño cycle period is 28.5 months) of years is 150% of the average in La Niña years. Landfall typhoons also occur more frequently in El Niño years. This may be because tropical cyclones atmospheric waves. These waves 0 form east of 150 E during El Niño years, giving them more time to develop, start in the tropical troposphere and 0 while La Niña storms tend to develop west of 150 E. travel higher before being dissipated in the stratosphere, and cause Quasi-Biennial Oscillation and Typhoons successive waves of easterly and westerly wind anomalies. QBO also has two phases: the westerly and easterly phase, corresponding to changes in tropical cyclone frequency.

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Natural Hazards in China | TransRe White Paper

These are not the only disasters that may strike – China is also exposed to brushfires, hail, landslides and volcanoes, many of which will be covered in subsequent papers.

TransRe is in the business of evaluating and managing risk. Our task is to understand the links between natural disasters, to weigh their correlations and to pass our analysis and experience to our customers.

These are not the only disasters that may strike – China is also exposed to

brushfires,Typhoons hail, landslides – The and Sciencevolcanoes, many of which will be covered in subsequent papers. Unlike any other ocean basin, the Western North Pacific Basin is vulnerable to tropical cyclone genesis throughout all 12 months of the year. Tropical TransRe is in the business of evaluating and managing risk. Our task is to cyclone genesis is, therefore, higher in the Western North Pacific Basin than understand the links between natural disasters, to weigh their correlations any other ocean basin. and to pass our analysis and experience to our customers. Storms that develop and strengthen to tropical storm or typhoon strength are Typhoonsmore likely to occur – from The June Science to November, when the six main requirements for typhoon formation are more prone to align: warm sea surface Unliketemperatures any other (SSTs), ocean enough basin, theCoriolis Western force North to develop Pacific a Basin low pressure is vulnerable tocenter, tropical atmospheric cyclone genesis instability, throughout low vertical all 12 wind months shear of, thehigh year. humidity Tropical in the What is ENSO? cyclonelower-to genesis-middle troposphere,is, therefore, andhigher a pre in the-existing Western low Northlevel disturbance.Pacific Basin than any other ocean basin. The El Niño Southern Oscillation As with tropical cyclones in every ocean basin, Western North Pacific Storms that develop and strengthen to tropical storm or typhoon strength are (ENSO) is the 3-5 year oscillation typhoon frequency, intensity and path are dictated by large-scale climate moreoscillations, likely to namely occur fromthe El June Niño to Southern November, Oscillation when the (ENSO) six main and requirements the Quasi- between anomalously warm (El Niño) forBiennial typhoon Oscillation formation (QBO). are more prone to align: warm sea surface and cold (La Niña) bands of ocean temperatures (SSTs), enough Coriolis force to develop a low pressure water dominating the Pacific Ocean. center,El Niño/La atmospheric Niña instability, and Typhoons low vertical wind shear, high humidity in the The poolsWhat of cold is and ENSO? warm water act lower-to-middle troposphere, and a pre-existing low level disturbance. as energy stores that influence ENSO oscillates between two phases: the anomalously warm El Niño phase, Theweather El Niño on aSouthern global scale, Oscillation Asand with the tropicalanomalously cyclones cold in La eve Niñary ocean phase. basin, Western North Pacific typhoon frequency, intensity and path are dictated by large-scale climate (ENSO)particularly is the near 3- 5the year W esternoscillation Pacific. oscillations,Countless studies namely have the Elfound Niño that Southern in El Niño Oscillation years, tropical (ENSO) cyclones and the haveQuasi - between anomalously warm (El Niño) Bienniallonger life Oscillation cycles and (QBO). become more intense storms, with a greater chance of and cold (La Niña) bands of ocean category 3-5 storms and lower chance of smaller storms water dominating the Pacific Ocean. El Niño/La Niña and Typhoons The pools Whatof cold isand QBO? warm water act Conversely, in La Niña years, tropical cyclones have shorter life cycles and as energy stores that influence ENSOtend to oscillates be less intense between storms. two phases: the anomalously warm El Niño phase, weatherThe quasi on-biennial a global oscillation scale, (QBO) and the anomalously cold La Niña phase. Over the past 50 years, the average number of named storms in El Niño particularlyis a slow moving near the pattern Western (average Pacific. cycle period is 28.5 months) of Countlessyears is 150% studies of the have average found inthat La in Niña El Niño years. years, Landfall tropical typhoons cyclones also have occur longermore frequently life cycles in and El Niñobecome years. more This intense may bestorms because, with tropical a greater cyclones chance of atmospheric waves. These waves 0 categoryform east 3 of-5 150stormsE duringand lower El Niño chance years, of smallergiving them storms more time to develop, start in the tropical troposphere and 0 while La Niña storms tend to develop west of 150 E. travel higherWhat before is QBO?being dissipated Conversely, in La Niña years, tropical cyclones have shorter life cycles and in the stratosphere, and cause tendQuasi to be-Biennial less intense Oscillation storms. and Typhoons Thesuccessive quasi-biennial waves ofoscillation easterly (QBO)and iswesterly a slow windmoving anomalies. pattern (average OverQBO thealso past has 50 two ye phases:ars, the theaverage westerly number and easterlyof named phase storms, corresponding in El Niño cycle period is 28.5 months) of yearsto changes is 150% in tropicalof the average cyclone in frequency La Niña .years. Landfall typhoons also occur more frequently in El Niño years. This may be because tropical cyclones atmospheric waves. These waves 0 Whenform east QBO of is150 in itsE westerlyduring El phase, Niño years, tropical giving cyclones them aremore more time frequent, to develop, and start in the tropical troposphere and 0 arewhile prone La Niña to be storms stronger tend storms. to develop This iswest due of to 1 50a decreaseE. in the vertical 3 travel higher before being dissipated wind shear over the Tropics during the westerly QBO phase. in the stratosphere, and cause Quasi-Biennial Oscillation and Typhoons Naturalsuccessive Hazards wave in Chinas of |easterly TransRe andWhite Paper Conversely, during the easterly QBO phase there are fewer formed and they westerly wind anomalies. areQBO less also strong. has two phases: the westerly and easterly phase, corresponding to changes in tropical cyclone frequency. For typhoons that impact China, ENSO has a stronger influence than QBO.

Typhoons – Insurance Implications 3 Natural Hazards in China TransRe White Paper 2 When considering where and when to underwrite contracts, insurers should Natural Hazards in China | TransRe White Paper seek the most up-to-date knowledge of and information about the dynamics of all Western North Pacific typhoons.

Recent studies show a westward shift over the past four decades in the two prevailing typhoon tracks in the Western North Pacific. Any westward move in typhoon track will increase typhoon landfall over all of coastal China, from subtropical southeastern China (including Hong Kong and Guangzhou) to northeastern China, as far as Qingdao. These significant metropolitan areas can expect increasing frequency of typhoons hitting their cities.

The shift in prevailing typhoon tracks has a profound influence on China, as regions like the Yangtze River Valley experience more flooding from tropical cyclones, while major cities along the coastline are more prone to be struck by heavy wind and rain. Figure 3. The June-October mean frequency of TC occurrence, and the prevailing winds and This shift is significant for risk managers, catastrophe modelers, and motion vectors. The thick solid lines represent the particularly underwriters of construction projects where the risks change and prevailing typhoon tracks. evolve as the construction progresses, from foundation to completion.

To correctly price Construction All Risk/ Erection All Risks (CAR/EAR), typhoon risk, underwriters should analyze not just the wind and flood CAR/EAR represents 10.5% of vulnerability of a structure in its various phases of construction, but also keep insured business in China. an eye on future trends of Western North Pacific typhoons. The trends can be partially understood by following the movement of ENSO, QBO and The top five provinces for various climate change effects. CAR/EAR insured exposure are: In El Niño years, impacts of typhoons in China are more pronounced due to 1. Guangdong the more westerly tropical cyclone track. This allows for greater longevity of 2. Jiangsu storms and greater percentage of landfall. El Niño years also result in above- 3. Shanghai normal tropical cyclone activity during September and October, but below- 4. Zhejiang normal activity in the South China Sea. 5. Fujian In post-El Niño years, when a La Niña is developing, tropical cyclone formation is below normal for the entire Western North Pacific Basin.

Given these facts, underwriters are well advised to understand the predictive methodology for El Niño/La Niña and the QBO. The National Weather Serviceʼs Climate Prediction Center, based out of Maryland, USA, sends out weekly and monthly diagnostics on the state of ENSO, and the oscillationʼs 4

Natural Hazards in China | TransRe White Paper

WhenWhen QBO QBO is in is its in westerlyits westerly phase, phase, tropical tropical cyclones cyclones are are more more frequent, frequent, and and areare prone prone to beto bestro strongernger storms. storms. This T hisis due is due to ato decrease a decrease in the in the vertical vertical windwind shear shear over over the the Tropics Tropics during during the the westerly westerly QBO QBO phase. phase.

Conversely,Conversely, during during the the easterly easterly QBO QBO phase phase there there are are fewer fewer formed formed and and they they areare less less strong. strong.

ForFor typhoons typhoons that that impact impact China, China, ENSO ENSO has has a stronge a stronger influencer influence than than QBO. QBO.

TyphoonsTyphoons – –Insurance Insurance Implications Implications

WhenWhen considering considering where where and and when when to underwriteto underwrite contracts, contracts, insurers insurers should should seekseek the the most most up -upto--dateto-date knowledge knowledge of andof and information information about about the the dynamics dynamics of allof Westernall Western North North Pacific Pacific typhoons. typhoons.

IntroductionRecentRecent studies studies show show a westward a westward shift shift over over the the past past four four decades decades in the in the two two prevailingprevailing typhoon typhoon tracks tracks in the in the Western Western North North Pacific. Pacific. Any Any westward westward move move Worldwide economic losses from natural catastrophes were $140 billion in in typhoonin typhoon track track will will increase increase typhoon typhoon landfall landfall over over all ofall coastalof coastal China, China, from from 2013 (events including Australia Drought, US Wildfire and Egyptian Snow), subtropicalsubtropical southeastern southeastern Ch inaCh ina(including (including Hong Hong Kong Kong and and Guangzhou) Guangzhou) to to of which 68% was uninsured. These figures are down from 2011 (Texas northeasternnortheastern China, China, as faras faras Qingdao.as Qingdao. These These significant significant metropolitan metropolitan areas areas Drought, Thailand Floods, Hurricane Irene), when 72% of the $380 billion cancan expect expect increasing increasing frequency frequency of typhoonsof typhoons hitting hitting their their cities. cities. economic losses were uninsured. While recent total losses from natural catastrophes are below average ($190 billion), they represent major losses TheThe shift shift in prevailing in prevailing typhoon typhoon tracks tracks has has a profound a profound influence influence on onChina, China, as as for insurers, and significant opportunities for global insurance growth. regionsregions like like the the Yangtze Yangtze River River Valley Valley experience experience more more flooding flooding from from tropical tropical cyclonescyclones, while, while major major cities cities along along the the coastline coastline are are more more prone prone to beto bestruck struck This growth potential is most apparent in Asia, which contributed 58% of by heavyby heavy wind wind and and rain. rain. 2013ʼs uninsured losses, with events such as Typhoon Haiyan and the FigureFigure 3. The 3. The June June-October-October mean mean frequency frequency of of Indian cold wave. More specifically, within Asia, China has the worldʼs TC TCoccurrence, occurrence, and and the theprevailing prevailing winds winds and and ThisT hisshift shift is significant is significant for forrisk risk managers, managers, catastrophe catastrophe modelers, modelers, and and largest population, one of the worldʼs largest and most vibrant economies, motionmotion vectors. vectors. The The thick thick solid solid lines lines represent represent the the particularlyparticularly underwriters underwriters of constructionof construction projects projects where where the the risks risks change change and and and is exposed to a plethora of natural catastrophes. It is extremely prevailingprevailing typhoon typhoon tracks. tracks. evolveevolve as theas the construction construction progresses, progresses, from from foundation foundation to completion.to completion. important that further research is performed to improve the ability of the governmentTo Tocorrectly planners, correctly price (re)insurersprice Construction Construction, businesses All ARllisk/ Risk/ andErection E citizensrection All ARtollisks betterRisks (CAR/EAR (CAR/EAR), ), understandtyphoontyphoon the impactrisk, risk, underwriters of underwriters natural disasters, should should analyze and analyze to not calibrate not just just the mitigation the wind wind and andplans. flood flood CAR/EARCAR/EAR represents represents 10.5% 10.5% of of vulnerabilityvulnerability of aof structure a structure in its in variousits various phases phases of construction,of construction, but but also also keep keep insured business in China. China is experiencing rapid industrialization and urbanization of the Historically,insure onlyd business 5% of economic in China. an aneye eye on onfuture future trends trends of Wofestern Western North North Pacific Pacific typhoons. typhoons. The The trends trends can can population. A number of these major population centers are coastal cities; loss from natural catastrophes has be bepartially partially understood understood by fobyllowing following the the movement movement of ENSO,of ENSO, QBO QBO and and TheThe top top five five provinces provinces for for exposing them to potential events such as rising sea levels, flooding and been recovered from insurers in variousvarious climate climate change change effects effects. . CAR/EARCAR/EAR insured insured exposure exposure are: are: increasingly frequent and severe windstorms. China, whereas 20-40% is In ElIn NiñoEl Niño years, years, impacts impacts of typhoonof typhoons ins China in China are are more more pronounced pronounced due due to to At the same time, these developing urban areas are benefiting from recovered in1. more 1.Guangdong establishedGuangdong thethe more more westerly westerly tropical tropical cyclone cyclone track. track. This This allows allows for forgreater greater longevity longevity of of significant investments in infrastructure and other projects in transport (high markets. 2. 2.Jiangsu Jiangsu stormsstorms and and greater greater percentage percentage of landfall.of landfall. El NiñoEl Niño years years also also result result in above in above- - speed rail, highways and airports), power (generation and transmission) and 3. 3.Shanghai Shanghai normalnormal tropical tropical cyclone cyclone activity activity during during September September and and October, October, but but below below- - water (storage, treatment and distribution). Such capital investments are 4. 4.Zhejiang Zhejiang normalnormal activity activity in the in the South South China China Sea. Sea. exposed to complicated delays and damage from natural catastrophes. 5. 5.Fujian Fujian In postIn post-El -NiñoEl Niño years, years, when when a La a LaNiña Niña is developing, is developing, tropical tropical cyclone cyclone As the cities have expanded, so has the need to feed them. Creating formationformation is below is below normal normal for ftheor the entire entire Western Western North North Pacific Pacific Basin. Basin. conservative water management systems and diversification away from flood plains areGiven twoGiven these of thesethe facts, significant facts, underwriters underwriters farming areand are well agricultur well advised advisedal challengesto understandto understand that the the predictive predictive China faces.methodologymethodology for forEl NiñoEl Niño/La/La Niña Niña and and the the QBO. QBO. The The National National Weather Weather ServiceServiceʼs Climateʼs Climate Prediction Prediction Center Center, based, based out out of Maryland,of Maryland, USA, USA, sends sends out out As public perceptions of risk and insurance change, and as insurance weeklyweekly and and monthly monthly diagnostics diagnostics on onthe the state state of ENSO,of ENSO, and and the the oscillation oscillationʼs ʼs penetration increases in developing markets, understanding the base strongest signals can be predicted up to 6-8 months in advance. This is also elements of accurate risk assessment and price adequacy becomes ever 4 4 true of the phases of QBO which enhance the track of typhoons and reduces more important. wind shear. Natural Hazards in China | TransRe White Paper Natural Hazards in China | TransRe White PaperOne paper cannot cover all aspects of natural catastrophes. Instead we offer Interested stakeholders should consider every approach angle, including a general overview of the major risks in China: an introduction to the science partnering with private companies, public organizations and universities to behind typhoons, monsoons, winter storms, drought and earthquakes, create more in-depth and long range prediction services. TransRe will and introduce some of the implications for local insurers. continue to monitor developments on behalf of our customers.

East Asia Monsoons - The Science 2

Natural Hazards in China TransRe White Paper 3 Natural Hazards in China | TransRe White Paper The East Asian Summer Monsoon (EASM) is a seasonal pattern of southeasterly winds that carry warm, moist air from the Indian and Pacific Oceans into East Asia. Each year, summer monsoons first appear in the central and southern Indochina Peninsula and the South China Sea, as seen in Figure 4a. The onset is abrupt and dramatic and is preceded by distinct circulation patterns over the tropical East Indian Ocean and Bay of Bengal.

The East Asian summer monsoon advances in a distinct stepwise march, with northward and northeastward movements. The monsoon forges ahead with two abrupt northward jumps and three completely stationary periods.

After commencing over the Indochina Peninsula and the South China Sea in early to mid-May, the monsoon jumps to the Yangtze River Basin, western and southern Japan and the Philippine Sea in early to mid-June, as in Figure 4b. The final step is into North China, Korea and central Japan by early to mid-July, like in Figure 4d.

With the reliable precipitation spike in July and August, a significant amount of moisture is transported from the South China Sea and leads to a dramatic change in climate regime in East Asia. After the Northern Hemisphereʼs summer, winds change to northeasterly and monsoonal bands retreat back to the south. Heavy rainfall in the winter season is confined to South China.

It is important to note that Pacific and Indian Ocean sea surface temperatures and Eurasia and Tibetan Plateau snowmelt are also contributing factors to processes and mechanisms related to EASM.

The EASM, like Asian typhoons, are distinctly affected by ENSO and QBO.

ENSO and Summer Monsoons

As El Niño develops, droughts tend to occur more often in North China, as El Niño prevents summer monsoons from migrating far to the north. This is due to the effect of El Niño on the location of Western Pacific Subtropical High.

Conversely, during the decaying stages of El Niño, floods tend to occur in the Yangtze River Valley, especially in the regions just south of the river.

QBO and Summer Monsoons

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Natural Hazards in China | TransRe White Paper

strongeststrongest signals signals can can be be predicted predicted up up to to 6 6-8-8 months months in in advance. advance. This This is is also also truetrue of of the the phases phases of of QBO QBO which which enhance enhance the the track track of of typhoons typhoons and and reduces reduces windwind shear. shear.

IntereInterestedsted stakeholders stakeholders should should consider consider every every approach approach angle, angle, including including partneringpartnering with with private private companies, companies, public public organizations organizations and and universities universities to to createcreate more more in in-depth-depth and and long long range range prediction prediction services. services. TransRe TransRe will will conticontinuenue to to monitor monitor developments developments on on behalf behalf o of four our customers. customers.

strongest signals can be predicted up to 6-8 months in advance. This is also true ofEast Eastthe phases AsiaAsia of QBO MonsoonsMonsoons which enhance the -- ThetrackThe of SciencetyphoonsScience and reduces wind shear. TheThe East East Asian Asian Summer Summer Monsoon Monsoon (EA (EASMSM) )is is a a seasonal seasonal pattern pattern of of Interesoutheasterlystedsoutheasterly stakeholders winds winds should that that carry considercarry warm, warm, every moist moist approach air air from from angle,the the Indian Indian including and and Pacific Pacific partneringOceansOceans with into intoprivate East East companies,Asia. Asia. Each Each year,public year, summer summerorganizations monsoons monsoons and universitiesfirst first appear appear toin in the the createcentral centralmore inand and-depth southern southern and long Indochina Indochina range predictionPeninsula Peninsula services.and and the the South SouthTransRe China China will Sea Sea, ,as as seen seen continueinin Figure Figureto monitor 4 4aa. .The Thedevelopments onset onset is is abrupt abrupt on behalf and and dramatic dramaticof our customers. and and is is preceded preceded by by di distinctstinct circulationcirculation patterns patterns over over the the tropical tropical East East Indian Indian Ocean Ocean and and Bay Bay of of Bengal. Bengal.

EastTheThe Asia East East Asian Asian Monsoons summer summer monsoon monsoon - Theadvances advances Science in in a a distinct distinct stepwise stepwise march, march, withwith northward northward and and northeastward northeastward movements. movements. The The monsoon monsoon forges forges ahead ahead The East Asian Summer Monsoon (EASM) is a seasonal pattern of withwith two two abrupt abrupt northward northward jumps jumps and and three three completely completely stationary stationary periods. periods. southeasterly winds that carry warm, moist air from the Indian and Pacific OceansAfterAfter into commencing commencing East Asia. Each over over year,the the Indochina Indochina summer Peninsulamonsoons Peninsula and firstand the appearthe S Southouth in C theChinahina S Seaea in in centralearlyearly and to southernto mid mid-May,-May, Indochina the the monsoon monsoon Peninsula jumps jumps and to to the the YangtzeSouth Yangtze China River River Sea Basin, Basin,, as seenwestern western in Figureandand 4 southern asouthern. The onset Japan Japan is abruptand and the the and Philippine Philippine dramatic Sea Sea and in in isearly early preceded to to mid mid -byJune-June distinct, ,as as in in Figure Figure circulation44bb. .The Thepatterns final final step stepover is isthe into into tropical North North EastChina, China, Indian Korea Korea Ocean and and central centraland Bay Japan Japan of Bengal. by by early early to to midmid-July-July, ,like like in in Figure Figure 4 4dd. . The East Asian summer monsoon advances in a distinct stepwise march, with northwardWithWith t hethe reliable andreliable northeastward precipitation precipitation movements.spike spike in in July July The and and monsoonAugust, August, a aforges significant significant ahead amount amount with twoofof moisture abruptmoisture northward is is transport transport jumpseded from fromand the threethe South South completely China China Sea Seastationary and and leads leads periods. to to a a dramatic dramatic changechange in in climate climate regime regime in in East East Asia. Asia. After After the the Northern Northern Hemisphere Hemisphereʼsʼs After commencing over the Indochina Peninsula and the South China Sea in summer,summer, winds winds change change to to northeasterly northeasterly and and monsoonal monsoonal bands bands retreat retreat back back early to mid-May, the monsoon jumps to the Yangtze River Basin, western toto the the south. south. Heavy Heavy rainfall rainfall in in the the winter winter s seasoneason is is confined confined to to South South China. China. and southern Japan and the Philippine Sea in early to mid-June, as in Figure 4b. TheItIt is finalis important important step is to intoto note note North that that China, Pacific Pacific Korea and and Indian Indianand central Ocean Ocean Japan sea sea surface surfaceby early to mid-Julytemperaturestemperatures, like in Figure and and 4 Eurasia dEurasia. and and Tibetan Tibetan P Plateaulateau snowmelt snowmelt are are also also contributingcontributing factors factors to to processes processes and and mechanisms mechanisms related related to to EASM. EASM. With the reliable precipitation spike in July and August, a significant amount of moistureTheThe EASM, EASM, is transport like like Asian Asianed from typhoons, typhoons, the South are are China distinctly distinctly Sea affected affectedand leads by by toENSO ENSO a dramatic and and QBO. QBO. change in climate regime in East Asia. After the Northern Hemisphereʼs summer,ENSOENSO winds and changeand Summer Summer to northeasterly Monsoons Monsoons and monsoonal bands retreat back to the south. Heavy rainfall in the winter season is confined to South China. AsAs El El Niño Niño develops develops, ,droughts droughts tend tend to to occur occur more more often often in in North North China, China, as as El El It is important to note that Pacific and Indian Ocean sea surface NiñoNiño prevents prevents summer summer monsoons monsoons from from migrating migrating far far to to the the north. north. This This is is due due temperatures and Eurasia and Tibetan Plateau snowmelt are also toto the the effect effect of of El El Niño Niño on on the the location location of of W Westernestern Pacific Pacific S Suubtropicalbtropical High. High. contributing factors to processes and mechanisms related to EASM.

Conversely,Conversely, during during the the decaying decaying stages stages of of El El Niño Niño, ,floods floods tend tend to to occur occur in in The EASM, like Asian typhoons, are distinctly affected by ENSO and QBO. thethe Yangtze Yangtze River River Valley, Valley, especially especially in in the the r egionsregions just just south south of of the the river. river.

ENSOQBOQBO and and and Summer Summer Summer Monsoons Monsoons Monsoons Chinaʼs summer rainfall clearly oscillates with a period of two or three years, As El NiñoChina developsʼs summer, droughts rainfall clearly tend tooscillates occur more with aoften period in Northof two China,or three as years, El most notably in eastern and southern China, including the Yangtze River 55 Niño preventsmost notably summer in eastern monsoons and southern from migrating China, includingfar to the the north. Yangtze This Riveris due Figure 4. Climatological precipitation rates in Figure 4. Climatological precipitation rates in Valley and the Huiahe River Valley, and is also seen in Northern China. sequence from early May to early June. Light and to the effectValley ofand El theNiño Huiahe on the River location Valley, of andWestern is also Pacific seen inSu Northernbtropical China. High. Naturalsequence Hazards from early in China May to | earlyTransRe June. White Light Paperand Naturaldark shadings Hazards represent in China rainfall | TransRe regions Whitegreater Paper dark shadings represent rainfall regions greater The variation in rainfall can be attributed to the oscillation of water vapor than 5 mm/day and 10 mm/day, respectively. BlackConversely, The variation during inthe rainfall decaying can bestages attributed of El toNiño the, floodsoscillation tend of to water occur va inpor than 5 mm/day and 10 mm/day, respectively. Black transfer from the South China Sea to the Asian continent. Monsoonal winds dots show the onset of the summer monsoon. the Yangtzetransfer River from Valley,the South especially China Sea in the to the regions Asian just continent. south ofMonsoonal the river. winds dots show the onset of the summer monsoon. are intensified during QBO westerly phases and bring more moisture to are intensified during QBO westerly phases and bring more moisture to mainland China. QBOmainland and Summer China. Monsoons

MonsoonsMonsoons – – Insurance Insurance Implications Implications 5 Each year, economic losses in China due to drought and floods average 200 Each year, economic losses in China due to drought and floods average 200 Natural Hazards in China TransRe White Paper billion Yuan (~US $24 billion). The 1998 summer floods in the Yangtze River 4 Natural Hazards in China | TransRe White Paper billion Yuan (~US $24 billion). The 1998 summer floods in the Yangtze River Basin and the Songhua and Nen River Valley created losses of Basin and the Songhua and Nen River Valley created losses of approximately 260 billion Yuan (~US $31 billion). All values above are approximately 260 billion Yuan (~US $31 billion). All values above are represented in 1998 currency exchange rates. represented in 1998 currency exchange rates. Climactic model recreations of the 1998 summer floods show that six major Climactic model recreations of the 1998 summer floods show that six major components came together in a ʻperfect stormʼ to create the severe floods in components came together in a ʻperfect stormʼ to create the severe floods in the Yangtze and Huiahe River Valleys. the Yangtze and Huiahe River Valleys.

Figure 5. Diagram of the components that came together to create the 1998 severe Figure 5. Diagram of the components that came together to create the 1998 severe floods in China. Shaded areas show precipitation anomalies over 80%. floods in China. Shaded areas show precipitation anomalies over 80%.

6 6

Natural Hazards in China | TransRe White Paper Natural Hazards in China | TransRe White Paper

Chinaʼs summer rainfall clearly oscillates with a period of two or three years, most notably in eastern and southern China, including the Yangtze River Chinaʼs summer rainfall clearly oscillates with a period of two or three years, Figure 4. Climatological precipitation rates in Valley and the Huiahe River Valley, and is also seen in Northern China. sequence from early May to early June. Light and most notably in eastern and southern China, including the Yangtze River Figure 4. Climatological precipitation rates in dark shadings represent rainfall regions greater ValleyThe variation and the in Huiahe rainfall River can be Valley, attributed and isto also the oscillationseen in Northern of water China. vapor thansequence 5 mm/day from earlyand 10 May mm/day, to early respectively. June. Light Bandlack transfer from the South China Sea to the Asian continent. Monsoonal winds dotsdark showshadings the onsetrepresent of the rainfall summer regions monsoon. greater The variation in rainfall can be attributed to the oscillation of water vapor than 5 mm/day and 10 mm/day, respectively. Black are intensified during QBO westerly phases and bring more moisture to transfer from the South China Sea to the Asian continent. Monsoonal winds dots show the onset of the summer monsoon. mainland China. are intensified during QBO westerly phases and bring more moisture to mainland China. ChinaMonsoonsʼs summer rainfall – Insurance clearly oscillates withImplications a period of two or three years, most notably in eastern and southern China, including the Yangtze River Figure 4. Climatological precipitation rates in ValleyMonsoons and the Huiahe – RiverInsurance Valley, and is Implications also seen in Northern China. sequence from early May to early June. Light and Each year, economic losses in China due to drought and floods average 200 billion Yuan (~US $24 billion). The 1998 summer floods in the Yangtze River dark shadings represent rainfall regions greater TheEach variation year, economic in rainfall losses can be in attributedChina due to to the drought oscillation and floodsof water average vapor 200 than 5 mm/day and 10 mm/day, respectively. Black Basin and the Songhua and Nen River Valley created losses of transbillionfer Yuan from (~US the South $24 b Chinaillion). SeaThe to1998 the summerAsian continent. floods in Monsoonalthe Yangtze winds River dots show the onset of the summer monsoon. approximately 260 billion Yuan (~US $31 billion). All values above are areBasin intensified and the Songhuaduring QBO and westerly Nen River phases Valley and created bring lossesmore moisture of to represented in 1998 currency exchange rates. mainlandapproximately China. 260 billion Yuan (~US $31 billion). All values above are Climarepresentectic modeld in 1998 recreations currency of exchange the 1998 summerrates. floods show that six major components came together in a ʻperfect stormʼ to create the severe floods in MonsoonsClimactic model recreations – Insurance of the 1998 summer Implications floods show that six major the Yangtze and Huiahe River Valleys. components came together in a ʻperfect stormʼ to create the severe floods in Each year, economic losses in China due to drought and floods average 200 the Yangtze and Huiahe River Valleys. billion Yuan (~US $24 billion). The 1998 summer floods in the Yangtze River Basin and the Songhua and Nen River Valley created losses of

approximately 260 billion Yuan (~US $31 billion). All values above are represented in 1998 currency exchange rates.

Climactic model recreations of the 1998 summer floods show that six major

components came together in a ʻperfect stormʼ to create the severe floods in the Yangtze and Huiahe River Valleys.

Figure 5. Diagram of the components that came together to create the 1998 severe floods in China. Shaded areas show precipitation anomalies over 80%. Figure 5. Diagram of the components that came together to create the 1998 severe

floods in China. Shaded areas show precipitation anomalies over 80%. 6 6 Natural Hazards in China | TransRe White Paper Chinaʼs urban planners now have an opportunity to develop sustainable

infrastructure that is capable of adapting to changes in local climate, sea Natural Hazards in China | TransRe White Paper levels and post-disaster recovery needs.

FigureIn doing 5. Diagramso, they of and the componentsthe insurers that who came protect together such to createinvestments the 1998 can severe learn floods in China. Shaded areas show precipitation anomalies over 80%. lessons from older infrastructure around the world that was not designed with climactic changes in mind, and to garner best practice lessons from6 the experiences of others.

Natural Hazards in China | TransRe White Paper Drought – The Science Natural Hazards in China TransRe White Paper 5 Chinaʼs diverse climate is dominated by a monsoonal system. The warm and wet summer monsoon is followed by a cool and dry winter monsoon that brings a completely different weather system to China. Despite being in the ʻtemperateʼ latitudes, Chinaʼs climactic patterns are far more complex than other temperate regions.

The yearly advance and retreat of the monsoons accounts for the timing and quantity of rainfall across the country. Conversely, this also means the monsoonʼs movement dictates when and where droughts hit China.

Geographically, rainfall regions are bisected by the Qin Mountain Range. Regions to the south and east receive upwards of 1000 millimeters of rain per year, most coming over spring and summer. Areas to the north and west of the Qin Mountains receive less rain, and rainfall events become less reliable, increasing the chances of a drought occurring.

China has suffered large-scale droughts for thousands of years. The trend Elevation map of China, in meters. Figure 6. has recently been on the upswing - 17 widespread droughts have hit China since 1949. Droughts are most common in the northern provinces of Jilin, Liaoning, Hebei, Shanxi, Henan, Shandong, Inner Mongolia, Gansu and Qinghai, where wheat and corn are the most commonly grown crops.

Historically, droughts were confined to Northern and Northwest China, but over the past 30 years, the impact has become more widespread, affecting areas in the Northeast and South, which were previously very moist regions.

Due to large annual variations in rainfall, drought in Huanghuai occurs more often. The Yangtze River Basin and the Henan and Anhui Provinces, which were previously unaffected by drought, have been hit hard multiple times since 2000.

The 2006 drought in Sichuan and Chongqing was the worst since 1950, while the drought in 2008-9 severely affected 12 Northern provinces.

Figure 7. Annual mean rainfall in China. The The drought that began in late 2010 and ended in March 2011 was even orange line represents a 350 millimeter/year isohyet, delineating the western extent of rainfall-fed worse than 2006. It started in the central and northern Yangtze River Basin and irrigated agriculture. and eventually limited water supplies to 3.5 million people, simultaneously halting cargo shipping along the river. Rainfall was 25% less than normal. The suppressed summer monsoon and heightened winter monsoon were

7

Natural Hazards in China | TransRe White Paper

Chinaʼs urban planners now have an opportunity to develop sustainable infrastructure that is capable of adapting to changes in local climate, sea levels and post-disaster recovery needs. Chinaʼs urban planners now have an opportunity to develop sustainable infrastructureIn doing so, thatthey is and capable the insurers of adapting who protectto changes such in investments local climate, can sea learn levelslessons and from post older-disaster infrastructure recovery needs around. the world that was not designed with climactic changes in mind, and to garner best practice lessons from the Inexperiences doing so, they of othersand the. insurers who protect such investments can learn lessons from older infrastructure around the world that was not designed with climactic changes in mind, and to garner best practice lessons from the experiencesDrought of others – The. Science

Chinaʼs diverse climate is dominated by a monsoonal system. The warm and Droughtwet summer monsoon– The is followedScience by a cool and dry winter monsoon that brings a completely different weather system to China. Despite being in the IntroductionChinaʻtemperateʼs diverseʼ latitudes, climate China is dominatedʼs climactic by apatterns monsoonal are far system. more complexThe warm than and wetother summer temperate monsoon regions. is followed by a cool and dry winter monsoon that Worldwidebrings economic a completely losses different from natural weather catastrophes system to China. were $140Despite billion being in in the 2013 ʻ(temperateeventsThe yearly includingʼ latitudes, advance Australia Chinaand retreat Droughtʼs climactic of, theUS patterns monsoonsWildfire areand accounts far Egyptian more forcomplex Snow) the timing, than and of whichotherquantity 68% temperate was of rainfalluninsured. regions. across These the country.figures are Conversely, down from this 2011 also (Texas means the Drought, Thailand Floods, Hurricane Irene), when 72% of the $380 billion monsoonʼs movement dictates when and where droughts hit China. economicThe yearlylosses advancewere uninsured and retreat. While of therecent monsoons total losses accounts from naturalfor the timing and catastrophesquantityGeographically, areof rainfall below rainfallacraverageoss regionsthe ($190 country. arebillion) bisected Conversely,, they byrepresent the this Qin also major Mountain means losses theRange. for insurers,monsoonRegions andʼs to significantmovement the south opportunities dictatesand east when receive for and global upwards where insurance droughts of 1000 growth. millimetershit China. of rain per year, most coming over spring and summer. Areas to the north and west This growthGeographically,of the potential Qin Mountains israinfall most receiveregionsapparent less are in bisectedrain,Asia, and which byrainfall thecontributed Qin events Mountain 58%become of Range. less 2013ʼsRegions reliable,uninsured to increasing the losses south, with theand eventschances east receive such of a as droughtupwards Typhoon occurring. of Haiyan1000 millimeters and the of rain Indianper cold year, wave most. More coming specifically, over spring within and Asia, summe Chinar. Areashas the to worldthe northʼs and west largestof Chinapopulation, the Qin has Mountains suffered one of the largereceive world-scale lessʼs largest droughts rain, and for rainfallmost thousands vibrant events ofeconomies, become years. The less trend Elevation map of China, in meters. Figure 6. and isreliable, exposedhas recently increasing to a beenplethora theon thechancesof natural upswing of catastrophes. a - drought17 widespread occurring. It is extr droughts emely have hit China important that further research is performed to improve the ability of the since 1949. Droughts are most common in the northern provinces of Jilin, governmentChinaLiaoning, hasplanners, sufferedHebei, (re)insurers Shanxi, large-scale Henan,, businesses droughts Shandong, for and thousands Incitizensner Mongolia, to of better years. Gansu The trend and Figure 6. Elevation map of China, in meters. understandhasQinghai, recently the impactwhere been wheatof on natural the and upswing disasters, corn are - 17 theand widespread most to calibrate commonly droughts mitigation grown have plans.crops. hit China since 1949. Droughts are most common in the northern provinces of Jilin, China is experiencing rapid industrialization and urbanization of the Historically, only 5% of economic Liaoning,Historically, Hebei, droughts Shanxi, were Henan, confined Shandong, to Northern Inner andMongolia, Northwest Gansu China, and but population. A number of these major population centers are coastal cities; loss from natural catastrophes has Qinghai,over the where past 30wheat years, and the corn impact are thehas most become commonly more widespread, grown crops. affecting exposingareas them in tothe potential Northeast events and suchSouth, as which rising were sea levelspreviously, flooding very andmoist regions. been recovered from insurers in increasinglyHistorically, frequent droughts and severe were confinedwindstorms. to Northern and Northwest China, but China, whereas 20-40% is overDue the to pastlarge 30 annual years, variations the impact in rainfall,has become drought more in Huanghuaiwidespread, occurs affecting more recovered in more established At theareas sameoften in .time, The the YangtzNortheastthese developinge River and BasinSouth, urban and which areas the were Henan are previouslybenefiting and Anhui veryfrom Provinces, moist regions. which markets. significantwere investments previously inunaffected infrastructure by drought, and other have projects been hitin hardtransport multiple (high times speedDue rail,since to highways large2000. annual and airports)variations, power in rainfall, (generation drought and in Huanghuai transmission) occurs and more water often(storage,. The treatment Yangtze Riverand distribution). Basin and the Such Henan capital and investments Anhui Provinces, are which exposedwereThe to previouslycomplicated2006 drought unaffected delays in Sichuan and by damagedrought, and Chongqing fromhave naturalbeen was hit catthe hardastrophes. worst multiple since times1950, sincewhile 2000. the drought in 2008-9 severely affected 12 Northern provinces. As the cities have expanded, so has the need to feed them. Creating Figure 7. Annual mean rainfall in China. The conservativeTheThe 2006 drought water drought managementthat inbegan Sichuan in systemslate and 2010 Chongqing and and diversification ended was in the March worst away 2 011since from was 1950,flood even orange line represents a 350 millimeter/year isohyet, delineating the western extent of rainfallplains-fed while areworse two the than ofdrought the 2006. significant in It2008 started- 9farming severely in the and central affected agricultur and 12 northernal Northern challenges Yangtze provinces. that River Basin China faces.and eventually limited water supplies to 3.5 million people, simultaneously Figureand irrigated 7. Annual agriculture. mean rainfall in China. The The drought that began in late 2010 and ended in March 2011 was even orange line represents a 350 millimeter/year halting cargo shipping along the river. Rainfall was 25% less than normal. isohyet, delineating the western extent of rainfall-fedAs publicworseThe perceptions suppressedthan 2006. of It srisk ummerstarted and monsoonininsurance the central and change, andheightened northern and as winter insuranceYangtze monsoon River Basin were and irrigated agriculture. penetrationandinfluenced eventually increases by limitedan in Eldeveloping Niño water phase supplies markets, while to, an3.5understanding extremely million people negative the, basesimultaneously Arctic elementshalting of accuratecargo shipping risk assessment along the river.and price Rainfall adequacy was 25% becomes less than ever normal. Oscillation contributed to the persistence of the drought once it had already 7 more Theimportant. suppressed summer monsoon and heightened winter monsoon were begun. One paper cannot cover all aspects of natural catastrophes. Instead we offer Natural Hazards in China | TransRe White Paper These 1-in-50 year and 1-in-60 year events have been heavily influenced by7 a general overview of the major risks in China: an introduction to the science climate change. Senior meteorologists at Chinaʼs National Climate Central behind suggestedtyphoons, that monsoons, the light rainwinter and storms, high temperatures drought and were earthquakes, results of Natural Hazards in China | TransRe White Paperand introduceanomalous some atmospheric of the implications currents, for and local that insurers. the droughts in China are part of a larger phenomenon felt worldwide. 2 Drought – Insurance Implications Natural Hazards in China TransRe White Paper 6 Natural Hazards in China | TransRe White Paper th Only about 1/8 of Chinaʼs land mass is capable of being cultivated for arable crops. Despite having less arable cropland than the USA, Chinaʼs agriculture output is twice the US total. This is due to intensive farming of the available land to maximize food growth to feed the much larger population of China. Agriculture represents just under 10% of Chinaʼs GDP.

Intensive farming and water usage leaves China exposed to chronic food and water shortages in times of drought. The persistent droughts in North China since the late 1970ʼs have brought huge losses to agriculture and affected the regionʼs water sources and ecology.

Efforts to expand farming land north and west have been met with limited success, as minimum rainfall requirements and nutrient content in soils are not favorable to rice, wheat, corn and millet production.

Droughts account for 52% of agricultural loss. It is no surprise, therefore, that maps of overall agricultural loss and drought distribution match up seamlessly.

Figure 8. The left image shows average severity of drought from 1987-2008, on the right it shows overall crop loss.

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Natural Hazards in China | TransRe White Paper

influenced by an El Niño phase, while an extremely negative Arctic influencedOscillation by contributed an El Niño to phase the persistence, while an extremelyof the drought negative once Arctic it had already Oscillationbegun. contributed to the persistence of the drought once it had already begun. influencedThese by1-in an-50 El yearNiño andphase 1-,in while-60 yearan extremely events have negative been Arctic heavily influenced by Oscillation contributed to the persistence of the drought once it had already These climate 1 -change.in-50 year Senior and 1meteorologists-in-60 year events at China haveʼs been National heavily Climate influenced Central by begun. climatesuggested change. that theSenior light meteorologists rain and high temperaturesat Chinaʼs National were results Climate of Central anomalous atmospheric currents, and that the droughts in China are part of Thesesuggested 1-in-50 yearthat theand light1-in- 60rain year and events high temperatureshave been heavily were influenced results of by climateanomalousa larger change. phenomen atmospheric Senior meteorologistson felt currents, worldwide. at and China thatʼs theNational droughts Climate in China Central are part of suggesteda larger that phenomen the light onrain felt and worldwide. high temperatures were results of anomalousDroughtinfluenced atmospheric by an – El Insurance currents,Niño phase and, thatwhile theImplications an droughts extremely in China negative are partArctic of a larger phenomenon felt worldwide. Oscillation contributed to the persistence of the drought once it had already Drought th– Insurance Implications begun.Only about 1/8 of Chinaʼs land mass is capable of being cultivated for th DroughtOnlyarable about crops. –1/8 DespiteInsurance of China havingʼs land less Implicationsmass arable is capable cropland of than being the cultivated USA, China for ʼs agricultureThese 1-in -output50 year is and twice 1- inthe-60 US year total. events This haveis due been to in tensiveheavily farminginfluenced of theby arable crops.th Despite having less arable cropland than the USA, Chinaʼs Only about 1/8 of Chinaʼs land mass is capable of being cultivated for agricultureavailableclimate change. land output to Senior maximizeis twice meteorologists the food US growth total. Thisat to China feed is due theʼs Nationalto much intensive larger Climate farming population Central of the of arable crops. Despite having less arable cropland than the USA, Chinaʼs IntroductionavailableChina.suggested Agriculture land that to the maximize represents light rain food and just growth high under temperatures to 10% feed of the China much wereʼs GDP.larger results population of of agriculture output is twice the US total. This is due to intensive farming of the China.anomalous Agriculture atmospheric represents currents, just under and that 10% the of droughts Chinaʼs GDP.in China are part of WorldwideavailableIntensivea larger economic land phenomen farmingto maximize losses andon from foodfeltwater worldwide. growthnatural usage to catastrophes leavefeed thes China much were exposed larger $140 population to billion chronic inof food China. Agriculture represents just under 10% of Chinaʼs GDP. 2013 (Intensiveeventsand water including farming shortages Australia and inwater time Drought susage of drought., leaveUS Wildfires T Chinahe pe and rsistentexposed Egyptian droughts to chronic Snow) in ,North food China since the late 1970ʼs have brought huge losses to agriculture and of whichIntensiveand 68% water farming was shortages uninsured. and water in timeTheseusages of leavefigures drought.s China are T down heexposed pe fromrsistent to 2011chronic droughts (Texas food in North affectedDrought the region – ʼInsurances water sources and Implications ecology. Drought,andChina water Thailand sinceshortages Floods,the late in time Hurricane1970s ofʼs drought. have Irene) brought T,he when pe hugersistent 72% losses ofdroughts the to $380 agriculture in North billion and economicChinaaffected since losses the were lateregionth 1970uninsuredʼs ʼwaters have .sources Whilebrought recent andhuge ecology. totallosses losses to agriculture from natural and EffortsOnly about to expand 1/8 of farming Chinaʼ sland land north mass and is capablewest have of beingbeen metcultivated with limited for catastrophesaffected the are region belowʼs water average sources ($190 and billion) ecology., they represent major losses success,arable crops. as minimum Despite havingrainfall lessrequirements arable cropland and nutrient than the content USA, in China soilsʼ sare for insurers,Efforts and to expand significant farming opportunities land north for and global west insurance have been growth. met with limited agriculture output is twice the US total. This is due to intensive farming of the Effortssuccess,not tofavorable expand as minimum farming to rice, land wheat,rainfall north cornrequirements and and west millet have and production. been nutrient met with content limited in soils are available land to maximize food growth to feed the much larger population of Thissuccess, growthnot favorable aspotential minimum to is rice, mostrainfall wheat, apparent requirements corn in and Asia, andmillet which nutrient production. contributed content in 58%soils areof China. Agriculture represents just under 10% of Chinaʼs GDP. 2013notʼs Droughtsfavorableuninsured toaccount losses rice, wheat,, forwith 52% cornevents of and agricultural such millet as production. Typhoon loss. It isHaiyan no surprise, and the therefore, that maps of overall agricultural loss and drought distribution match up Indian Droughtscold wave account. More specifically, for 52% of agriculturalwithin Asia, loss. China It ishas no the surprise, worldʼ stherefore, that DroughtsseamlesslyIntensive account farming. for 52% and of water agricultural usage loss.leave Its is China no surprise, exposed therefore, to chronic that food largestmaps population, of overall one agricultural of the world lossʼs largest and drought and most distribution vibrant economies,match up mapsand of wateroverall shortages agricultural in loss time ands of drought drought. distribution The persistent match updroughts in North and is seamlesslyexposed to. a plethora of natural catastrophes. It is extremely seamlessly China since. the late 1970ʼs have brought huge losses to agriculture and important that further research is performed to improve the ability of the affected the regionʼs water sources and ecology. government planners, (re)insurers, businesses and citizens to better understandEfforts the to impact expand of farming natural landdisasters, north and towest calibrate have been mitigation met with plans. limited

success, as minimum rainfall requirements and nutrient content in soils are China is experiencing rapid industrialization and urbanization of the Historically, only 5% of economic not favorable to rice, wheat, corn and millet production. population. A number of these major population centers are coastal cities; loss from natural catastrophes has exposingDroughts them to account potential for events 52% of such agricultural as rising loss. sea levelsIt is no, floodingsurprise, and therefore, that been recovered from insurers in increasinglymaps frequentof overall and agricultural severe wind lossstorms. and drought distribution match up China, whereas 20-40% is seamlessly. recovered in more established At the same time, these developing urban areas are benefiting from

markets. significant investments in infrastructure and other projects in transport (high speed rail, highways and airports), power (generation and transmission) and

water (storage, treatment and distribution). Such capital investments are

exposed to complicated delays and damage from natural catastrophes.

As the cities have expanded, so has the need to feed them. Creating

conservative Figure water8. The managementleft image shows systems average and severity diversification of drought fromaway 1987 from-2008, flood on the Figure 8. The left image shows average severity of drought from 1987-2008, on the plains areright two it shows of the overall significant crop loss. farming and agricultural challenges that rightFigure it shows 8. overallThe left crop image loss. shows average severity of drought from 1987-2008, on the China rightfaces. it shows overall crop loss. Chinaʼs crop insurance market is growing rapidly, at a time when pricing

As publiccannot perceptions rely on historic of risk anddata insurance while projecting change, future and astrends. insurance The Chinese 8 8 penetration increases in developing markets, understanding the base agricultural market is currently the second largest in the world, behind the 8 elements of accurate risk assessment and price adequacy becomes ever Natural HazardsHazards in in China China | TransRe| TransRe White White Paper Paper United States. more important. Natural Hazards in China | TransRe White Paper Risk managers in China and abroad should take note to manage their One papersystemic cannot risk, cover looking all aspects at correlations of natura ofl losscatastrophes. between and Instead within we provinces. offer a general overview of the major risks in China: an introduction to the science behindTransRe Figuretyphoons, 8. intendThe monsoons, lefts imageto produce shows winter furtheraverage storms, papers severity drought that of drought will and delve from earthquakes, into 1987 the-2008, science on the of and introduceflood,right it hail,shows some typhoon overall of the crop andimplications loss.cold temperatures, for local insurers. and their effects on crop insurance in China. 2 8 Winter Storms – The Science Natural Hazards in China TransRe White Paper 7 Natural Hazards in China | TransRe White Paper Natural Hazards in China | TransRe White Paper Extratropical Cyclones (ETC) are mid-latitude cyclones that derive their energy from the horizontal temperature differential between warm, subtropical air masses and cold, Arctic air masses.

ETCs differ in structure, shape and size from Northwest Pacific typhoons. The latter are warm core tropical cyclones, deriving their energy from a vertical temperature differential between the upper and lower atmosphere.

Because ETCs are fueled by a horizontal temperature differential and not warm sea surface temperatures, they can form over land masses and will not dissipate as they track over land.

Phase I- A perturbation forms along a baroclinic zone between low and high pressure systems.

Phase II- The wave amplifies, scale contracts and the fronts of the storm form.

Phase III-The fronts ʻT-boneʼ and waves amplify. Storm force winds form between the warm and occluded fronts.

Phase IV-Full seclusion of the warm front. Storm and hurricane force winds found on cold side of the occluded front.

Figure 9. The Shapiro-Keyser Extratropical Cyclone Model, developed in 1990, shows the life-cycle of an ETC.

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Natural Hazards in China | TransRe White Paper

ChinaChinaʼs cropʼs crop insurance insurance market market is growing is growing rapidly, rapidly, at a at time a time when when pricing pricing cannotcannot rely rely on historicon historic data data while while projecting projecting future future trends. trends. The The Chinese Chinese agriculturalagricultural market market is currently is currently the thesecond second larg largest estin the in theworld, world, behind behind the the UnitedUnited States. States.

RiskRisk managers managers in C inhina China and and abroad abroad should should take take note note to manage to manage their their systemicsystemic risk, risk, looking looking at correlations at correlations of loss of loss between between and and within within provinces. provinces.

TransReTransRe intend intends tos produce to produce further further papers papers that that will willdelve delve into into the thescience science of of flood,flood, hail, hail, typhoon typhoon and and cold cold temperatures, temperatures, and and their their effect effects ons cropon crop insuranceinsurance in China in China. .

Chinaʼs crop insurance market is growing rapidly, at a time when pricing cannotWinterWinter rely on historicStorms Storms data while – The–projecting The Science futureScience trends. The Chinese agricultural market is currently the second largest in the world, behind the ExtratropicalExtratropical Cyclones Cyclones (ETC) (ETC) are aremid mid-latitude-latitude cyclones cyclones that that derive derive their their United States. energyenergy from from the thehorizontal horizontal temperature temperature differential differential between between warm warm, , Risksubtropical managerssubtropical air in massesCairhina masses and and abroad and cold, cold, Arctic should Arctic air take masses.air notemasses. to manage their systemic risk, looking at correlations of loss between and within provinces. ETCsETCs differ differ in structure, in structure, shape shape and and size size from from Northwest Northwest Pacific Pacific typhoons. typhoons. TransReTheThe latter intend latter ares arewarmto produce warm core core tropicalfurther tropical paperscyclones, cyclones, that deriving will deriving delve their into their energy the energy science from from a of a flood,vertical hail,vertical temperaturetyphoon temperature and differentialcold differential temperatures, between between andthe theuppertheir upper effect and and slower on lower crop atmosphere. atmosphere. insurance in China. BecauseBecause ETC ETCs ares arefueled fueled by aby horizontal a horizontal temperature temperature differential differential and and not not warmwarm sea sea surface surface temperatures, temperatures, they they can can form form over over land land masses masses and and will will Winternot notdissipate dissipate Storms as theyas they track – track overThe over land. Scienceland.

Extratropical Cyclones (ETC) are mid-latitude cyclones that derive their Phase I- A perturbation forms Phase I- A perturbation forms energy from the horizontal temperature differential between warm, along a baroclinic zone between along a baroclinic zone between subtropical air masses and cold, Arctic air masses. lowlow and and high high pressure pressure systems. systems. ETCs differ in structure, shape and size from Northwest Pacific typhoons. Phase II- The wave amplifies, Phase II- The wave amplifies, The latter are warm core tropical cyclones, deriving their energy from a scalescale contracts contracts and and the thefronts fronts of of vertical temperature differential between the upper and lower atmosphere. the thestorm storm form. form. Because ETCs are fueled by a horizontal temperature differential and not PhasePhase III- TheIII-The fronts fronts ʻT- boneʻT-boneʼ andʼ and warm sea surface temperatures, they can form over land masses and will waveswaves amplify. amplify. Storm Storm force force winds winds not dissipate as they track over land. formform between between the thewarm warm and and occludedoccluded fronts. fronts. Phase I- A perturbation forms alongPhase Phasea baroclinic IV- FullIV-Full seclusi zone seclusi betweenon ofon the of the lowwarm andwarm highfront. front. pressure Storm Storm and systems. and hurricane hurricane forceforce winds winds found found on coldon cold side side of of Phase II- The wave amplifies, the theoccluded occluded front. front. scale contracts and the fronts of the storm form.

Phase III-The fronts ʻT-boneʼ and waves amplify. Storm force winds FigureFigure 9. The 9. TheShapiro Shapiro-Keyser-Keyser Extratropical Extratropical Cyclone Cyclone Model, Model, developed developed in 1990, in 1990, shows shows the lifethe- cyclelife-cycle of an of ETC an ETC. . form between the warm and occluded fronts. Current studies of Chinese ETCs cover the tracking, climatic characteristics, Phase IV-Full seclusion of the Currentintensity, studies movement of Chinese and areas ETCs of cover explosively the tracking,-deepening climatic cyclones. characteristics, The 9 9 warm front. Storm and hurricane intensity,findings movementshow that thereand areas are three of explosively main areas-deepening of ETC development cyclones. The in and force winds found on cold side of findingsaround show East Asia.that there are three main areas of ETC development in and NaturalNatural Hazards Hazards in China in China | TransRe | TransRe White White Paper Paper the occluded front. around East Asia. Cyclogenesis- The development or 1. The western area of cyclogenesis refers to the western Siberian Cyclogenesis- The development or o o o strengthening of cyclonic circulation 1. ThePlain western (55 N -area75 N, of 60 cyclogenesisE) refers to the western Siberian o o o strengtheningin the atmosphere of cyclonic (an area circulation of low 2. PlainThe (55centralN-75 areaN, 60refersE) to Mongolia, more specifically to the south inpressure). the atmosphere (an area of low 2. Theof Lakecentral Baikal area refers to Mongolia, more specifically to the south Figure 9. The Shapiro-Keyser Extratropical Cyclone Model, developed in 1990, shows 3. ofT Lakehe eastern Baikal area refers to the east coast of the China-Northwest pressure). the life-cycle of an ETC. 3. ThePacific eastern Ocean area border refers to the east coast of the China-Northwest Pacific Ocean border

9 Winter Storms – Insurance Implications Natural Hazards in China TransRe White Paper 8 Natural Hazards in China | TransRe White Paper Winter Storms – Insurance Implications Knowing the area of potential ETC development, insurers in China should be Knowingable to assistthe area in lossof potential mitigation, ETC while development, better knowledge insurers will in Chinaalso encourage should be ablesocioeconomic to assist in loss development mitigation, in while areas better less affectedknowledge by willthe alsoconditions. encourage socioeconomic development in areas less affected by the conditions. ETCs are generated more in central and eastern areas than in the west. For ETCsaffected are areas,generated more more storms in central are generated and eastern in spring areas (there than inis theno ETCwest. For affectedgenesis areas, in the moreWest stormsin summer are generatedat all). With in the spring end (thereof summer/beginning is no ETC of genesisautumn, in genesisthe West increases in summer dramatically at all). With in theeach end area. of summer/beginning of autumn, genesis increases dramatically in each area. In the eastern area, there is a southward shift of ETC genesis and track in Inthe the winter. eastern This area, means there a is greater a southward chance shift of storms of ETC tracking genesis into and Shanghai track in theand winter. Qingdao, This wheremeans insurance a greater penetrationchance of storms is above tracking average. into Shanghai and Qingdao, where insurance penetration is above average.

10 10

Natural Hazards in China | TransRe White Paper Natural Hazards in China | TransRe White Paper

Current studies of Chinese ETCs cover the tracking, climatic characteristics, Current studies of Chinese ETCs cover the tracking, climatic characteristics, intensity, movement and areas of explosively-deepening cyclones. The intensity, movement and areas of explosively-deepening cyclones. The findings show that there are three main areas of ETC development in and findings show that there are three main areas of ETC development in and around East Asia. around East Asia. Cyclogenesis- The development or Cyclogenesis- The development or 1. The western area of cyclogenesis refers to the western Siberian 1. The westerno o areao of cyclogenesis refers to the western Siberian strengthening of cyclonic circulation Plain (55 N-75o N, o60 E) o strengthening of cyclonic circulation Plain (55 N-75 N, 60 E) in the atmosphere (an area of low 2. The central area refers to Mongolia, more specifically to the south in the atmosphere (an area of low 2. The central area refers to Mongolia, more specifically to the south pressure). of Lake Baikal pressure). of Lake Baikal 3. The eastern area refers to the east coast of the China-Northwest 3. The eastern area refers to the east coast of the China-Northwest Pacific Ocean border Pacific Ocean border

CurrentWinter studies of Chinese Storms ETCs cover– Insurance the tracking, climatic Implications characteristics, intensity, movementWinter and Storms areas of explosively – Insurance-deepening cyclones. Implications The findings show that there are three main areas of ETC development in and Knowing the area of potential ETC development, insurers in China should be around EastKnowing Asia. the area of potential ETC development, insurers in China should be able to assist in loss mitigation, while better knowledge will also encourage able to assist in loss mitigation, while better knowledge will also encourage Cyclogenesis- The development or socioeconomic development in areas less affected by the conditions. 1. Thesocioeconomic western area development of cyclogenesis in areas refers less to the affected western by Siberianthe conditions. o o o strengthening of cyclonic circulation Plain (55 N-75 N, 60 E) ETCs are generated more in central and eastern areas than in the west. For in the atmosphere (an area of low 2. TheETCs central are areagenerated refers more to Mongolia, in central more and specificallyeastern areas to the than south in the west. For affected areas, more storms are generated in spring (there is no ETC pressure). ofaffected Lake Baikal areas, more storms are generated in spring (there is no ETC genesis in the West in summer at all). With the end of summer/beginning of 3. Thegenesis eastern in thearea West refers in tosummer the east at coastall). With of the the China end of-Northwest summer/beginning of autumn, genesis increases dramatically in each area. Pacificautumn, Ocean genesis border increases dramatically in each area. In the eastern area, there is a southward shift of ETC genesis and track in In the eastern area, there is a southward shift of ETC genesis and track in the winter. This means a greater chance of storms tracking into Shanghai the winter. This means a greater chance of storms tracking into Shanghai and Qingdao, where insurance penetration is above average. Wintera ndStorms Qingdao, where – Insurance insurance penetration Implications is above average.

Knowing the area of potential ETC development, insurers in China should be

able to assist in loss mitigation, while better knowledge will also encourage socioeconomic development in areas less affected by the conditions.

ETCs are generated more in central and eastern areas than in the west. For

affected areas, more storms are generated in spring (there is no ETC genesis in the West in summer at all). With the end of summer/beginning of

autumn, genesis increases dramatically in each area.

In the eastern area, there is a southward shift of ETC genesis and track in the winter. This means a greater chance of storms tracking into Shanghai and Qingdao, where insurance penetration is above average.

Figure 10. Starting position of cyclone tracks in East Asia. Inverted triangles represent10 10 the starting point of each track; slashed lines represent areas of influence.

Natural Hazards in China | TransRe White Paper Natural Hazards in China | TransRe White Paper Many of the storm tracks go right through some of the most heavily populated provinces in China, along the East China Sea. Additionally, these

tracks match up with locations of areas where explosively-deepening cyclones occur most frequently, and where ETCs track the furthest over land.

All these findings correspond to the potential for greater insured loss per storm, as insurance penetration continues to grow. Risk managers and underwriters should take such facts into account as part of their overall risk assessment.

10 Earthquakes – The Science Natural Hazards in China TransRe White Paper 9 Natural Hazards in China | TransRe White Paper Chinaʼs highly active tectonic regime makes the country one of the most Island Arc – Known as the First earthquake-prone in the world. The continental margins that represent Island Chain, the island arcs are a Chinaʼs tectonic borders are not a single boundary line, rather than a series of major archipelagos that complicated amalgamation of transitional crusts, composed of continental extend from the East Asian and transitional plates of different widths. The island arcs further complicate continental mainland coast. Chinese tectonic architecture.

The various rifts and margins create a complex collage of subduction-related zones. The principal geotectonic provinces are: The North China Craton, Yangtze Craton, Cathaysia Block (South China Block), Tarim Craton, Altay- Convergent - Boundary where Tianshan-Hinggan oregens (Altaids), Kunlung-Qinlang fold belt, South China two or more tectonic plates of Fold Belt, the Himalayan, Qingai-Yunnan and Gandise fold belts. Together, the lithosphere collide. the interaction of these tectonic zones accounts for millions of years of tumultuous geologic history. Subduction- Area at The five major tectonic principalities in China (North China, South China, convergent boundaries where Godwana, which are continental, Siberian-Mongolian and the Western one plate moves below another Pacific, which are continental margins) create the most earthly stresses tectonic plate. through subduction and convergent crustal zones.

Geothermal - Thermal energy One tectonic domain consists of the North China continental margin in the generated and stored in the south and the Siberian-Mongolian continental margin in the north. These run earth. from the western Aibi-Juyan zone to the northern slope of North TIanshan to Beishan, and the eastern Suolun-Xilamulun zone crossing the border line on Lithosphere - The crust and the Tumen River in eastern Jilin. upper mantle of the earth. Other domains, such as the convergent zone between North China and Fold Belt - Series of South China continental boundary run along the Kunlun-Qinling line. The Sahngyang-Tongcheng convergent zone of increased tectonic activity runs mountainous foothills that form from southern-Shaanxi and enters the Yellow Sea near Lianyun Harbor, and due to tectonic interactions. is divided by the Tancheng-Lujiang transcurrent fault in eastern Anhui.

The East China Continental Margin Domain is a part of the giant, trans- Pacific volcanic belt. The dominant section comprises the 450 million year

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Natural Hazards in China | TransRe White Paper

FigureFigure 10. S 10tarting. Starting position position of cyclone of cyclone tracks tracks in East in EastAsia. Asia.Inverted Inverted triangles triangles represent represent the startingthe starting point pointof each of eachtrack ;track slashed; slashed lines linesrepresent represent areas areas of influence. of influence.

ManyMany of the of storm the storm tracks tracks go right go rightthrough through some some of the of most the most heavily heavily populatedpopulated provinces provinces in China, in China, along along the East the East China China Sea. Sea. Additionally, Additionally, these these trackstracks match match up with up withlocations locations of areas of areas where where explosively explosively-deepening-deepening cyclonescyclones occur occur most most frequently, frequently, and whereand where ETCs ETCs track track the furthest the furthest over over land.land .

All theseAll these findings findings correspond correspond to the to potential the potential for greater for greater insured insured loss lossper per storm,storm, as insurance as insurance penetration penetration continues continues to grow. to grow. Risk Riskmanager managers ands and underwriterunderwriters shoulds should take takesuch such facts facts into accountinto account as part as ofpart their of theiroverall overall risk risk assessmentassessment. . Current studies of Chinese ETCs cover the tracking, climatic characteristics, intensity,FigureEarthquakesEarthquakes movement10. Starting positionand areas – of The cyclone –of explosivelyThe tracksScience Science in- Eastdeepening Asia. Inverted cyclones. triangles The represent findingsthe starting show point that ofthere each are track three; slashed main lines areas represent of ETC areas development of influence. in and aroundChina ChinaEastʼs highly Asia.ʼs highly active active tectonic tectonic regime regime makes makes the country the country one ofone the of most the most IslandIsland Arc Arc– Known – Known as the as Firstthe First Many of the storm tracks go right through some of the most heavily earthquakeearthquake-prone-prone in the in world. the world. The continentalThe continental margins margins that representthat represent CyclogenesisIslandIsland Chain, -Chain, The the development islandthe island arcs arcs are or aare a populated provinces in China, along the East China Sea. Additionally, these China1. ChinaʼThes tectonic ʼwesterns tectonic borders area borders of are cyclogenesis not are a not single a single refers boundary boundary to the line, western line,rather rather Siberian than thana a strengtheningseries of major of cyclonic archipelagos circulation that tracks match upo with olocationso of areas where explosively-deepening series of major archipelagos that complicatedcomplicatedPlain (55 amalgamationN amalgamation-75 N, 60 ofE) transitional of transitional crusts, crusts, composed composed of continental of continental in the atmosphere (an area of low cyclones occur most frequently, and where ETCs track the furthest over extendextend from from the Eastthe East Asian Asian and2. transitionalandThe transitional central plates area plates ofrefers different of todifferent Mongolia, widths. widths. The more islandThe specifically island arcs arcsfurther to furtherthe complicate south complicate land. pressure).continentalcontinental mainland mainland coast. coast. ChineseChineseof Laketectonic tectonicBaikal architecture. architecture. 3. The eastern area refers to the east coast of the China-Northwest All these findings correspond to the potential for greater insured loss per The variousThePacific various rifts Ocean andrifts bordermarginsand margins create create a complex a complex collage collage of subduction of subduction-related-related storm, as insurance penetration continues to grow. Risk managers and zones.zones. The principalThe principal geotectonic geotectonic provinces provinces are: Theare: NorthThe North China China Craton, Craton, underwriters should take such facts into account as part of their overall risk YangtzeYangtze Craton, Craton, Cathaysia Cathaysia Block Block (South (South China China Block), Block), Tarim Tarim Craton, Craton, Altay Altay- - assessment. ConvergentConvergent - Boundary - Boundary where where TianshanTianshan-Hinggan-Hinggan oregens oregens (Altaids), (Altaids), Kunlung Kunlung-Qinlang-Qinlang fold belt,fold belt,South South Chin China a two twoor more or more tectonic tectonic plates plates of of WinterFold FoldBelt, Belt,Stormsthe Himalayan, the Himalayan, – QinInsurancegai Qin-Yunnangai-Yunnan and ImplicationsGandiseand Gandise fold belts.fold belts. Together, Together, the interaction of these tectonic zones accounts for millions of years of the lithospherethe lithosphere collide. collide. Earthquakesthe interaction of these – The tectonic Science zones accounts for millions of years of Knowingtumultuoustumultuous the area geologic of geologic potential history. history. ETC development, insurers in China should be Chinaʼs highly active tectonic regime makes the country one of the most IslandSubductionSubduction Arc –- KnownArea- Area at as at the First able to assist in loss mitigation, while better knowledge will also encourage earthquakeThe fiveThe majorfive-prone major tectonic in tectonic the principalities world. principalities The continental in China in China (North margins (North China, that China, South represent South China, China, Islandconvergentconvergent Chain, boundaries the boundaries island wherearcs where are a socioeconomic development in areas less affected by the conditions. ChinaGodwana,Godwana,ʼs tectonic which which borders are continental are are continental not ,a Siberian single, Siberian boundary-Mongolian-Mongolian line, and rather theand Western thanthe Western a one plate moves below another seriesone of platemajor moves archipelagos below another that ETCscomplicatedPacific arePacific ,generated which, whichamalgamation are morecontinental are continental in central of margins)transitional and margins) eastern create crusts, create areasthe composed most the than most earthly in theofearthly continental stresseswest. stresses For extendtectonictectonic from plate. theplate. East Asian affectedandthrough transitionalthrough areas, subduction moresubduction plates storms and of convergentand different are convergent generated widths. crustal incrustal The springzones. island zones. (there arcs is further no ETC complicate continental mainland coast. genesisChinese in the tectonic West architecture.in summer at all). With the end of summer/beginning of Geothermal - Thermal energy One tectonic domain consists of the North China continental margin in the Geothermal - Thermal energy autumn,One genesis tectonic increases domain dramatically consists of inthe each North area. China continental margin in the generated generated and andstored stored in the in the Thesouth variousso anduth theand rifts Siberian the and Siberian margins-Mongolian-Mongolian create continental a complexcontinental margin collage margin in ofthe subductionin north. the north. These-related These run run earth.earth. In thezones.from eastern fromthe The western the area,principal western thereAibi geotectonic- JuyanAibi is a- Juyansouthward zone provinceszone to the shiftto northern the ofare: northernETC The slope genesis North slope of NorthChina and of North track TIanshan Craton, TIanshanin to to theYangtzeBeishan, winter.Beishan, This Craton, and means theand Cathaysia eastern the a easterngreater Suolun Block chanceSuolun- Xilamulun(South -ofXilamulun stormsChina zone Block),tracking zone crossing crossing Tarim into the Shanghai Craton, border the border Altayline online- on ConvergentLithosphereLithosphere -- BoundaryThe - Thecrust crust whereand and andTianshanthe Qingdao, Tumenthe Tumen-Hinggan whereRiver River ininsurance oregens eastern in eastern (Altaids),Jilipenetrationn. Jilin. Kunlung is above-Qinlang average. fold belt, South China twoupper orupper mantlemore mantle tectonic of the of earth. theplates earth. of Fold Belt, the Himalayan, Qingai-Yunnan and Gandise fold belts. Together, OtherOther domains, domains, such such as the as convergent the convergent zone zone between between North North China China and and the lithosphere collide. the interaction of these tectonic zones accounts for millions of years of FoldFold Belt Belt - Series - Series of of tumultuousSouthSouth China Chinageologic continental continental history. boundary boundary run along run along the Kunlun the Kunlun-Qinling-Qinling line. line.The The SahngyangSahngyang-Tongcheng-Tongcheng convergent convergent zone zone of increased of increased tectonic tectonic activity activity runs runs Subductionmountainousmountainous- foothillsArea foothills at that thatform form Thefrom five fromsouthern major southern- Shaanxitectonic-Shaanxi principalitiesand entersand enters the in YelloChina the Yellow (NorthSeaw Seanear China, nearLianyun South Lianyun Harbor, China, Harbor, and and due dueto tectonic to tectonic interactions. interactions. convergent boundaries where Godwana,is dividedis divided by which the by Tancheng arethe continentalTancheng-Lujiang-,Lujiang Siberian transcurrent transcurrent-Mongolian fault faultinand eastern inthe eastern Western Anhui. Anhui. one plate moves below another Pacific, which are continental margins) create the most earthly stresses

tectonic plate. throughThe EastThe subduction East China China Continental and Continental convergent Margin Margin Domaincrustal Domain zones. is a partis a partof the of giant, the giant, trans trans- - PacificPacific volcanic volcanic belt. belt.The dominantThe dominant section section comprises comprises the 450 the million450 million year year

Geothermal - Thermal energy One oldtectonic South domain China Mountainsconsists of andthe foldNorth belts China stretching continental from margin the southeastern in the generated and stored in the southcoastal and the region Siberian to the-Mongolian Nadanhada continental Mountains margin in Northeast in the north. China. These run11 11 earth. from the western Aibi-Juyan zone to the northern slope of North TIanshan to Beishan,Each and of these the eastern tectonic Suolun lines is-Xilamulun intimately zone intertwined crossing with the the border geologic line on NaturalNaturalLithosphere Hazards Hazards in China in- TheChina | TransRe crust | TransRe and White White Paper Paper the Tumenevolution River of China. in eastern Almost Jilin. every major recorded earthquake in China, in upper mantle of the earth. both ancient and modern times, has been a result of changes in tectonic Otherarchitecture. domains, such as the convergent zone between North China and

Fold Belt - Series of South China continental boundary run along the Kunlun-Qinling line. The SahngyangThe major-Tongcheng earthquakes convergent have occurred zone of over increased subduction tectonic zones activity and runs mountainous foothills that form from convergentsouthern-Shaanxi zones. andCrustal enters development the Yellow in Sea China near is Lianyunvery active; Harbor, geothermal and due to tectonic interactions. is dividedevents by and the tectTanchengonics movements-Lujiang transcurrent have caused fault earthquakes in eastern Anhui.numerous times in the past ten years, just as socioeconomic development has burgeoned. The East China Continental Margin Domain is a part of the giant, trans-

Pacific volcanic belt. The dominant section comprises the 450 million year Earthquakes – Insurance Implications 10 Looking at the historical catalog of catastrophic Chinese earthquakes, some11 Natural Hazards in China TransRe White Paper major trends come to light. Almost all earthquakes occur along known, active 10 Natural Hazards in China | TransRe White Paper fault lines. However, the historical data does not provide insurers with the Natural Hazards in China | TransRe White Paper most important information: predictions of long-term seismic hazards in China.

Since high-risk areas with significant exposures have not experienced major earthquakes in recent history, underwriters must combat buyer complacency and disbelief in applied science.

Combining knowledge of lithospheric strain rate with high resolution soil maps is one way to determine areas most prone to earthquake risk. Factoring tectonic strain and soil composition into risk equations will Figure 11. Major geological units and their relative determine the intensity of ground shaking given strength of earthquake. motion (mm/yr) with respect to stable regions nearby. Thin lines represent active faults. Earthquakes of all magnitudes can destroy structures, whether finished or under construction. Once again, CAR/EAR differs from other lines, in that structures are at different susceptibilities to quake through the phases of construction.

Much of the CAR/EAR business involves mid-rise masonry or mid-to high- rise reinforced concrete buildings. Yet the most prevalent structures in many small towns across China are unreinforced masonry (URM) structures. URM structures are the most vulnerable to ground motion, and were the principal type of structure lost in the 2008 Sichuan earthquake.

Figure 12. Earthquakes of magnitude 5.0 or greater, from 1990 to 2002.

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Natural Hazards in China | TransRe White Paper

old South China Mountains and fold belts stretching from the southeastern coastal region to the Nadanhada Mountains in Northeast China.

old South China Mountains and fold belts stretching from the southeastern old South China Mountains and fold belts stretching from the southeasternEach of these tectonic lines is intimately intertwined with the geologic coastal region to the Nadanhada Mountains in Northeast China. coastal region to the Nadanhada Mountains in Northeast China. evolution of China. Almost every major recorded earthquake in China, in Each of these tectonic lines is intimately intertwined with the geologic Each of these tectonic lines is intimately intertwined with the geologicboth ancient and modern times, has been a result of changes in tectonic evolution of China. Almost every major recorded earthquake in China, in evolution of China. Almost every major recorded earthquake in China, in both ancient and modern times, has been a result of changes in tectonicarchitecture. both ancient and modern times, has been a result of changes in tectonic architecture. architecture. The major earthquakes have occurred over subduction zones and The major earthquakes have occurred over subduction zones and The major earthquakes have occurred over subduction zones and convergent zones. Crustal development in China is very active; geothermalconvergent zones. Crustal development in China is very active; geothermal convergent zones. Crustal development in China is very active; geothermal events and tectonics movements have caused earthquakes numerousevents times and tectonics movements have caused earthquakes numerous times events and tectonics movements have caused earthquakes numerous times in the past ten years, just as socioeconomic development has burgeoned. in the past ten years, just as socioeconomic development has burgeoned.in the past ten years,old Sou thjust China as Mountains socioeconomic and fold belts development stretching from has the southeastern burgeoned. old South China Mountains and fold belts stretching from the southeastern old South China Mountains and fold belts stretching from the southeastern coastal region to the Nadanhada Mountains in Northeast China. coastal region to the Nadanhada Mountains in Northeast China. coastal regionEarthquakes to the Nadanhada Mountains– Insurance in Northeast Implications China. Earthquakes – Insurance Implications Each of these tectonic lines is intimately intertwined with the geologic Each of these tectonicEarthquakes lines is intimately intertwined – with Insurance the geologic Implications Each of theseLooking tectonic at the lines historical is intimately catalog intertwined of catastrophic with the Chinese geologic earthquakes, some evolution of China. Almost every major recorded earthquake in China, in Looking at the historical catalog of catastrophic Chineseevolution earthquakes, of China. Almost some every major recorded earthquake in China, in evolution ofmajor China. trends Almost come every to light. major Almost recorded all earthquakes earthquake inoccur China, along in known, active both ancient and modern times, has been a result of changes in tectonic major trends come to light. Almost all earthquakesboth occur ancient along andknown, modern active times, has been a result of changes in tectonic both ancientfault and lines. modern However, times, the has historical been a resultdata does of changes not provide in tectonic insurers withLooking the at the historicalarchitecture. catalog of catastrophic Chinese earthquakes, some fault lines. However, the historical data does not providearchitecture. insurers with the architecture.most important information: predictions of long-term seismic hazardmajors in trends come to light. Almost all earthquakes occur along known, active most important information: predictions of long-term seismic hazards in The major earthquakes have occurred over subduction zones and China. China. The major earthquakesfault have lines. occurred However, over subduction the historical zones and data does not provide insurers with the The major earthquakes have occurred over subduction zones and convergent zones. Crustal development in China is very active; geothermal convergent zones. Crustal development in China is very active; geothermal convergentSince zones. high Crustal-risk areas development with significant in China exposures is very active; have notgeothermal experienced most major important eventsinformation and tect:onics predict movementsions of have long caused-term earthquakes seismic hazardnumerouss times in Since high-risk areas with significant exposures haveevents not andexperienced tectonics major movements have caused earthquakes numerous times events andearthquakes tectonics movements in recent history have ,caused underwriters earthquakes must combat numerous buyer times complacency in the past ten years, just as socioeconomic development has burgeoned. earthquakes in recent history, underwriters must combatin the past buyer ten complacency years,China. just as socioeconomic development has burgeoned. and disbelief in applied science. in the pastand ten disbelief years, injust applied as socioeconomic science. development has burgeoned. Earthquakes – Insurance Implications Combining knowledge of lithospheric strain rate with high resolutionSince soil high-risk areas with significant exposures have not experienced major Combining knowledge of lithospheric strain rate withEarthquakes high resolution soil – Insurance Implications Earthquakesmaps is one way– Insuranceto determine areas Implications most prone to earthquake risk. maps is one way to determine areas most prone to earthquake risk. earthquakes in recentLooking athistory the historical, underwriters catalog of catastrophic must combat Chinese buyer earthquakes, complacency some Factoring tectonic strain and soil composition intoLooking risk equations at the historical will catalog of catastrophicmajor trends Chinese come earthquakes, to light. Almost some all earthquakes occur along known, active Figure 11. Major geological units and their relativeLooking Factoringat the historical tectonic catalog strain ofand catastrophic soil composition Chinese into earthquakes, risk equations some will and disbelief in applied science. Figure 11. Major geological units and their relative determine the intensity of ground shaking given majorstrength trends of earthquake. come to light. Almost all earthquakes occur along known, active motion (mm/yr) with respect to stable regionsmajor trendsdetermine come theto light. intensity Almost of ground all earthquakes shaking given occur strength along known, of earthquake. active fault lines. However, the historical data does not provide insurers with the motion (mm/yr) with respect to stable regions nearby. Thin lines represent active faults. fault lines. However, the historical data doesmost notimportant provide information insurers with: predict the ions of long-term seismic hazards in nearby. Thin lines represent active faults. fault lines.Earthquakes However, the of historical all magnitudes data does can notdestroy provide structures, insurers whether with the finished or Earthquakes of all magnitudes can destroy structures,most whether important finished informationCombining or : predict knowledgeions ofChina. long -term of seismiclithospheric hazards strainin rate with high resolution soil most importantunder information construction.: predict Onceions again, of long CAR/EAR-term seismic differs hazardfrom others in lines, in that under construction. Once again, CAR/EAR differsChina. from other lines, inmaps that is one way to determine areas most prone to earthquake risk. China. structures are at different susceptibilities to quake through the phases of structures are at different susceptibilities to quake through the phases of Since high-risk areas with significant exposures have not experienced major construction. Factoring tectonic strain and soil composition into risk equations will Since high-risk areas with significant exposuresearthquakes have in not recent experienced history, underwritersmajor must combat buyer complacency Since highconstruction.-Figurerisk areas 11 with. Major significant geological exposures units have and not their experienced relative major earthquakes in recentdetermine history, underwriters the intensityand must disbelief combat of inground applied buyer complacencyscience.shaking given strength of earthquake. earthquakesMuch in recent of the historyCAR/EAR, underwriters business involves must combat mid-rise buyer masonry complacency or mid- to high- Muchmotion of the (mm/yr)CAR/EAR with business respect involves to stable mid-rise regions andmasonry disbelief or mid in applied-to high -science. and disbeliefrise in reinforced applied science. concrete buildings. Yet the most prevalent structures in many risenearby. reinforced Thin concrete lines buildings. represent Yet active the most faults. prevalent structures in many Combining knowledge of lithospheric strain rate with high resolution soil small towns across China are unreinforced masonry (URM) structures.Earthquakes URM of all magnitudes can destroy structures, whether finished or small towns across China are unreinforced masonryCombining (URM) structures. knowledge URM of lithospheric strainmaps rate is withone wayhigh toresolution determine soil areas most prone to earthquake risk. Combiningstructures knowledge are of the lithospheric most vulnerable strain rate to ground with high motion, resolution and were soil the principal structures are the most vulnerable to ground motion,maps and is were one waythe principal tounder determine construction. areas mostFactoring prone Once to tectonic earth again,quake strain risk.CAR/EAR and soil composition differs into from risk otherequations lines, will in that maps is onetype way of structureto determine lost areasin the most2008 proneSichuan to earthearthquake.quake risk. type of structure lost in the 2008 SichuanFigure earthquake. 11.Factoring Major geological tectonic units strainstructures and theirand relativesoil arecomposition atdetermine different into riskthe susceptibilities equationsintensity of will ground shakingto quake given through strength ofthe earthquake. phases of FactoringFigure tectonic 11. strainMajor geologicaland soil composition units and their into relativemotion risk equations (mm/yr) with will respect to stable regions Figure 11. Major geological units and their relative determine the intensity of ground shaking given strength of earthquake. determinemotion the intensity (mm/yr) withof ground respect shaking to stable givenregions strengthnearby. Thin of earthquake. lines represent activeconstruction. faults. motion (mm/yr) with respect to stable regions Earthquakes of all magnitudes can destroy structures, whether finished or nearby. Thin lines represent active faults. nearby. Thin lines represent active faults. Earthquakes of all magnitudes can destroyunder structures, construction. whether Once finished again, or CAR/EAR differs from other lines, in that Earthquakes of all magnitudes can destroy structures, whether finished or under construction. Once again, CAR/EAR differs from other lines, in that under construction. Once again, CAR/EAR differs from other lines, in that Much of the CAR/EARstructures businessare at different involves susceptibilities mid- riseto quake masonry through theor midphases-to of high - structures are at different susceptibilities to quake through the phases of structures are at different susceptibilities to quake through the phases of rise reinforced concreteconstruction. buildings. Yet the most prevalent structures in many construction. construction. small towns acrossMuch Chinaof the CAR/EAR are unreinforced business involves masonry mid-rise (URM)masonry structures.or mid-to high- URM Much of the CAR/EAR business involves mid-rise masonry or mid-to high- Much of the CAR/EAR business involves mid-rise masonry or mid-to high- structures are therise most reinforced vulnerable concrete buildings. to ground Yet themotion, most prevalent and were structures the principalin many rise reinforced concrete buildings. Yet thesmall most towns prevalent across structures China are in unreinforced many masonry (URM) structures. URM rise reinforced concrete buildings. Yet the most prevalent structures in many Figure 12. Earthquakes of magnitude 5.0 or small towns acrosstype China of are structure unreinforced lost masonry in the (URM) 2008 structures. Sichuan URM earthquake. Figure 12. Earthquakes of magnitude 5.0 or small towns across China are unreinforced masonry (URM) structures. URM structures are the most vulnerable to ground motion, and were the principal greater, from 1990 to 2002. structures are the most vulnerable to ground motion, and were the principal greater, from 1990 to 2002. structures are the most vulnerable to ground motion, and were the principal type of structure lost in the 2008 Sichuan earthquake. type of structure lost in the12 2008 Sichuan earthquake. type of structure lost in the 2008 Sichuan earthquake. 12

Natural Hazards in China | TransRe White Paper Natural Hazards in China | TransRe White Paper

Figure 12 . Earthquakes of magnitude 5.0 or

Figure 12. Earthquakes of magnitude 5.0 or greater, from 1990 to 2002. Figure 12. Earthquakes of magnitude 5.0 or greater,Figure from 121990. Earthquakes to 2002. of magnitude 5.0 or greater, from 1990 to 2002. Utilizing earthquake maps is the best way to comprehend how complex plate 12 greater, from 1990 to 2002. 12 tectonic schematics might act in future years. Geotectonic science12 is among

the most difficult to fathom and predict,Natural but is Hazards one area in Chinawhere |understanding TransRe White Paper 12 Naturalthe history Hazards does in Chinahelp in | predictingTransRe White future Paper scenarios. NaturalNatural Hazards Hazards in China in China | TransRe TransRe White White Paper Paper 11 ContactsNatural Hazards in China | TransRe White Paper

To discuss any of the contents of this paper, please contact the author:

James Rohman Global Catastrophe Management, New York

T: 1 (212) 365 2438 E: [email protected]

To discuss the implications of this paper, and your reinsurance needs in response, please contact:

Robert Baldrey Chief Catastrophe Officer, New York

T: 1 (212) 365 2004 E: [email protected]

Andy Taylor Chief Underwriting Officer, Asia-Pacific Region

T: +44-20-7204-8604 E: [email protected]

Rob Saville TransRe Singapore

T: +65 6589 8288 E: [email protected]

Peter Ho TransRe Hong Kong

T: +852 2696 8131 E: [email protected]

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Natural Hazards in China | TransRe White Paper

Utilizing earthquake maps is the best way to comprehend how complex plate tectonic schematics might act in future years. Geotectonic science is among the most difficult to fathom and predict, but is one area where understanding the history does help in predicting future scenarios.

Utilizing earthquake maps is the best way to comprehend how complex plate

tectonicContacts schematics might act in future years. Geotectonic science is among the most difficult to fathom and predict, but is one area where understanding To discuss any of the contents of this paper, please contact the author: the history does help in predicting future scenarios. James Rohman ContactsGlobal Catastrophe Management, New York T: 1 (212) 365 2438 To discuss anyE: of [email protected] contents of this paper, please contact the author:

James Rohman To Globaldiscuss Catastrophe the implications Management, of this paper, New and York your reinsurance needs in response, please contact: T: 1 (212) 365 2438 E: [email protected] Baldrey Chief Catastrophe Officer, New York To discuss the implications of this paper, and your reinsurance needs in T: 1 (212) 365 2004 response, pleaseE: [email protected]: Robert Baldrey Chief CatastropheAndy Taylor Officer , New York Chief Underwriting Officer, Asia-Pacific Region T: 1 (212) 365 2004 E: [email protected]: +44-20-7204-8604 E: [email protected] Andy Taylor Chief Underwriting Officer, Asia-Pacific Region Rob Saville T: +44TransRe-20-7204 Singapore-8604 E: [email protected] T: +65 6589 8288 E: [email protected] Rob Saville TransRe Singapore Peter Ho T: +65TransRe 6589 8288 Hong Kong E: [email protected] T: +852 2696 8131 E: [email protected] Peter Ho TransRe Hong Kong

T: +852 2696 8131 E: [email protected]

13

Natural Hazards in China | TransRe White Paper

13 Natural Hazards in China TransRe White Paper 12 Natural Hazards in China | TransRe White Paper

Citations

AIR Worldwide

Aon Benfield Citations Associated Press AIR Worldwide Chan, Johnny., ʻThe East Asian summer monsoon: an overviewʼ, 2004. Aon Benfield China-travel-guide.com Associated Press China National Bureau of Statistics Database Chan, Johnny., ʻThe East Asian summer monsoon: an overviewʼ, 2004. Design by IncDesign China-travel-guide.com Guy Carpenter China National Bureau of Statistics Database Huang, Ronghui, ʻCharacteristics and variations of the East Asian monsoon Designsystem by IncDesign and its impacts on climate disasters in Chinaʼ, 2007.

Guy CarpenterLiu et al. , ʻActive tectonics and intracontinental earthquakes in China: The kinematics and geodynamicsʼ, Continental Intraplate Earthquakes: Science, Huang,Hazard Ronghui, and ʻCharacteristicsPolicy Issues: Geological and variations Society of the of AmericaEast Asian Speical monsoon Paper, system2007. and its impacts on climate disasters in Chinaʼ, 2007.

Liu et al.University, ʻActive tectonics of North and Carolina intracontinental at Chapel earthquakes Hill, Urban andin China: Regional The Studies, kinematicsProgram and geodynamicson Chinese Citiesʼ, Continental Intraplate Earthquakes: Science, Hazard and Policy Issues: Geological Society of America Speical Paper, 2007. US Geological Survey

UniversityWu etof al. North, ʻGrowing Carolina typhoon at Chapel influence Hill, on Urban East andAsia Regionalʼ, 2005. Studies, Program on Chinese Cities Yingxian et al., ʻA Climatology of Extratropical Cyclones over East Asia US GeologicalDuring 1958 Survey-2001 ʼ, 2011.

Wu et al. , ʻGrowing typhoon influence on East Asiaʼ, 2005.

Yingxian et al., ʻA Climatology of Extratropical Cyclones over East Asia During 1958-2001ʼ, 2011.

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