Modeler EQECAT said Typhoon Megi is expected to cause $500 million to $1 billion in economic damages in China after having causing extensive damage and 27 deaths earlier in the week in the Philippines.
Megi could impact several major cities that produce Chinese products, such as garments, plastic, ceramics, stainless steel, and toys, said EQECAT.
Yet insurance losses are expected to be far lower than economic losses due to low insurance penetration in the affected areas, EQECAT added.
Currently the storm is in the South China Sea and is now the equivalent of a Category 2 hurricane with maximum sustained winds of 109 mph.
It is expected to make landfall in China on Friday or early Saturday as a typhoon equivalent to a Category 1 hurricane, said modeler Risk Management Solutions (RMS).
According to the latest track forecast by the Joint Typhoon Warning Centre (JTWC), Megi is expected to make landfall about 180 miles northeast of Hong Kong. However, there is some uncertainty with the track forecast, which has an "uncertainty cone" of 400 miles.
On Oct. 18 Megi struck the Philippines as a Super Typhoon but insured losses are expected to be less than $150 million due to low insurance penetration, according to AIR Worldwide.