Changes in Exposure and Weather Risk: Preparing for Natural Catastrophe Disruption in Asia

     

While Typhoon Yagi made a significant impact on economic and insured losses in China, Vietnam and Philippines, 2024 was a relatively quiet year for natural catastrophes in Asia when compared with the long-term regional trend. This also contrasts with the global picture where economic losses from natural disasters in 2024 are estimated at USD$360 billion, more than 10 percent above the long-term average since 2000.¹

Typhoon Impacts: What’s Changed in a Decade

Making landfall in September 2024, Typhoon Yagi was one of the most severe storms to hit the region since Typhoon Rammasun in 2014. Much of Southeast Asia, including Vietnam, China, Myanmar, Philippines and Thailand, suffered extensive damage. As well as having major humanitarian impacts (over 800 people were killed and thousands more were injured across several countries²), Yagi resulted in some of the highest typhoon-related economic losses recorded in recent years.

“Typhoon Yagi was the strongest Autumn typhoon that hit China since 1949, and it is one of the strongest typhoons on record to land in Hainan province, second only to Typhoon Rammasun in 2014³,” says Yifan Fu, Head of Analytics, Greater China. “It followed a similar path to Typhoon Rammasun, though it lasted longer as a super typhoon and caused damage to new exposures, for example offshore or near-shore wind farms, which highlights how economic developments bring new risks and insurance considerations.”

The impacts of this storm system also revealed the importance of considering flood risk from typhoons, as well as wind damage. “In low-lying areas like Vietnam, typhoon flood had a significant impact on industrial estates,” says Brad Weir, Head of Analytics, Asia. “This requires risk managers to assess local mitigation or adaptation measures to prevent major losses.”

Despite Yagi’s severity, the overall frequency of severe weather events in Asia was relatively low in 2024. This reduced frequency has seen insurance premiums remain stable, offering some relief to organisations in the region.

Ongoing Earthquake Risks in Japan and Taiwan

April 2024 saw a significant earthquake impact Taiwan, one of a series of seismic events to affect the country.

Japan also experienced an earthquake on 1 January 2024, near the Noto Peninsula. It was one of the largest magnitude shallow crustal earthquakes rupturing directly beneath mainland Japan in more than 100 years. “While the affected area has a relatively high proportion of older buildings, it had relatively low exposure compared to other regions in Japan,” says Sayaka Ochi, Head of Catastrophe Research, Japan. While the earthquake resulted in localised heavy damage to properties, the region’s low population concentration meant there was little impact on reinsurance treaties.

Risk Challenges: Exposure and Multi-Country Event Impacts

Despite low insured losses from extreme weather and earthquakes in 2024, exposure development is a continual challenge for insurers. The underlying growth in exposure, rather than climate change alone, are driving shifts in loss patterns. “Climate risk contributes to volatility,” Weir says. “But exposure growth remains the primary underlying driver of loss trends.”

The Typhoon Yagi experience highlights learnings about taking a risk management approach that extends beyond sovereign borders. “Many people assess risks at a country level rather than from a regional perspective,” Weir says. “Typhoons and monsoonal flooding often impact multiple countries at the same time, which demands a broader approach.”

Indirect business interruption coming from weather events is another risk to consider. “If manufacturing and supply chains are impacted, even businesses that aren’t directly damaged can suffer,” says Weir. “We’ve seen power and water supply disruptions, as well as agricultural damage, across affected regions,” adds Fu. “These considerations should be part of the risk outlook for companies that rely on suppliers in the region.”

Advances in Modelling for Flood Peril

While flooding is considered a secondary peril coming from the typhoon events that are typical in Asia, Typhoon Yagi demonstrated the importance of flood as a driver of economic and insured loss. This is of particular concern for companies and insurers, as floods have historically been difficult to model, compared to earthquake or wind risk. “Asia is at the forefront of flood modelling,” Fu says. “Despite this, there remains a need for better tools and industry collaborations with academics. Advancements in technology are helping to close this gap.”

“Improvements over the past five years have made a significant difference,” agrees Weir. “At Aon, we now have better tools and data to understand the complexities of flood risk.”

Despite limited impacts from weather and natural catastrophe in Asia over the last year, peak events highlight the region’s ongoing vulnerability to typhoons, earthquakes, and flooding, with changes in exposure introducing new risks. A comprehensive, multi-country strategy, together with advanced modelling and data inputs, is critical in helping risks managers prepare for future events, as climate and exposure trends continue to evolve.

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¹ Aon, 2025 Climate and Catastrophe Insight Report
² Aon, 2025 Climate and Catastrophe Insight Report
³ China Meteorological Administration, September 2024