A tale of two storms
For all that has been written about the much-vaunted shift of global economic power from west to east in the past decade, some phenomena seem slow to adapt to the new realities.
For instance, for much of last week Super Typhoon Tembin bore down on central Taiwan, promising a prospective landfall at Category 4 strength, yet few in the international insurance community remarked on the possible dangers to life, limb and economy.
Meanwhile no sooner did Tropical storm Isaac form than the world's media sprang into action, posting intrepid reporters to stand on windswept beaches in their sou'westers as the storm approached Florida.
Perhaps the world-weary would suggest that Taiwan is too
insignificant to matter?
At $38,200 GDP per capita Taiwan is still a way off the US's
$48,100, but still comfortably beats the UK and most of the rest of
the European Union.
Taiwan is a world leader in some of the highest value added
industries on earth and sports major concentrations of value in key
global sectors such as the manufacture of semiconductors.
What's more, with a level in the high teens, Taiwan's insurance penetration rate is among the highest in the world, dwarfing that of the US which languishes in the high single digits, meaning that per capita the average Taiwanese person almost certainly puts more into the global insurance pot than their US counterpart.
Granted Taiwan is perhaps less connected to the global financial community and trades less with the West than the US, which exports a major percentage of its insurance dollars to Bermuda and Western Europe, producing approximately half of the international (re)insurance market's top line.
Therefore the financial reality is that Taiwan still doesn't matter to us as a market as much as the US does.
But we would wager that there was another major factor at play.
Despite the lessons of history, Taiwan is simply better prepared
for major natural disaster than the US.
With a relatively new housing stock constructed of reinforced
concrete, standards of building construction are palpably higher
than in the US.
Meanwhile the Asian island nation has undertaken huge public works to minimise the risk of landslip and extreme flood events emanating from its mountainous eastern side.
In short, Taiwan is pretty storm resistant, speaking both physically and financially.
Meanwhile, for all of the recent improvements, it is clear that the US is not storm-ready in a physical sense, or in the truest financial sense.
Florida enacted stronger building codes after Hurricane Andrew, but such measures take generations to work their way through the housing stock. And the change in building codes did little to halt the explosion of building on the hurricane-exposed shoreline over the past 15 years.
Andrew also led to the birth of underfunded state-backed insurance structures that have since proliferated, stretching in a vast arc from Texas to Maine.
These subsidising constructs have acted in a pro-cyclical manner and positively encouraged more construction in harm's way over a period of almost two decades.
Despite recent reforms a major landfalling hurricane in a large Florida conurbation will still have the power to severely impair the state's publicly subsidised insurance sector. Many other states would struggle in similar fashion.
The US is also a naturally optimistic place, which is usually a tremendous asset.
However, this can have its disadvantages that with hindsight can appear like wishful thinking or naivety.
For instance, which other nation can boast a major political party highly accustomed to government that would schedule a massively important set piece political event in Florida right at the peak of the hurricane season?
For this reason, although Isaac is projected to hit Louisiana as a manageable Category 1 hurricane, the Western media is right to remain fixated, even if its coverage remains borderline hysterical.
It's been so long since the last storm hit the Southeast that we simply do not know what will happen if and when it does.
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