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 a b a b 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, given data in the 2010 Chinese Census. b) Percentage a b population change, from 2000 to 2010, given Census data. a b 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. 1 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. 3 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