Global reinsurer
Swiss Re has announced its preliminary economic loss estimates for the first half of 2017 – and the results are significantly lower than last year.
In the first six months of the year (H1), global and man-made catastrophes resulted in US$44 billion in losses, much lower than the US$117 billion loss estimates in the first half of 2016. This is due to a number of factors, including fewer and less intense catastrophe events.
Insured losses from disasters were US$23 billion in H1 2017, down from $36 billion in H1 2016. Of the US$44 billion total global economic losses in H1 2017, natural catastrophes counted for US$41 billion, while the remaining US$3 billion came from man-made disasters.
“Global disaster losses were below their 10-year average, both on an economic and insured level. They were among the lowest in the last 10 years,” said Thomas Holzheu, chief economist, Americas, Swiss Re. “There was a lower number of events and no multi-billion dollar loss events.
“As a general long-term trend, uninsured losses are growing (in relation to economic activity as measured by GDP), and we see a shift of exposures moving to emerging economies, which are less resilient in coping with the economic disruptions caused by large catastrophes.”
Swiss Re found the largest losses were caused by severe thunderstorms in the US. Four separate severe weather events between February and May caused US$8.2 billion in economic damages, of which 78% was insured, according to Holzheu. The costliest event was the four-day long storm in May, which caused severe hail damage to properties in Colorado and other southern and central states.
“Severe convective storms were the costliest peril due to a record high number of thunderstorms in the US, including hailstorms and tornado outbreaks,” Holzheu told Insurance Business. “Losses from this peril were among the highest of the past 10 years, due to an early start of the tornado season and a high number of tornadoes, in addition to intense hail activity. Individually, though, none of these events crossed the multi-billion dollar loss threshold.”
Swiss Re’s sigma data shows economic losses from natural disaster events averaged $171 billion each year in the last decade, with 72% uninsured.
Holzheu commented: “Insurance penetration is much lower in most emerging countries and also in the US for certain important perils such as flood and earthquake.”
The largest insurance event outside of the US was Cyclone Debbie, a category four tropical cyclone that hit the north-eastern coast of Australia in late March. Strong winds of up to 263 km/h and severe flooding in central and southeast Queensland and northeast New South Wales led to insured losses of US$1.3 billion.
Other large events included floods in Peru and frost damage in parts of Europe. At the beginning of the year, there was also a cold spell in Europe that claimed dozens of hypothermia victims. This was followed by a summer of heatwaves and record temperatures in several European locations, making H1 2017 a period of weather extremes.
High temperatures and dry weather have continued through the northern hemisphere’s summer season, igniting wildfires in many parts of the world, including in British Columbia.
“Overall, larger markets for catastrophe reinsurance are well integrated globally through international reinsurers. Some re/insurance markets in smaller economies can be less resilient due to more restrictive regulations and more closed financial markets,” said Holzheu.
Related stories:
Cyclone Debbie blows $200m hole in Berkshire Hathaway’s insurance profits
Swiss Re suffers mid-year financials slump
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