By the Editor
A number of powerful storms helped make 2016 the costliest 12 months for natural catastrophe losses in the last four years, according to Munich Re, the specialist in natural catastrophe risk insurance, writes Ian Harper.
According to Peter Höppe, Head of Munich Re’s Geo Risks Research Unit: “There are now many indications that certain events – such as persistent weather systems or storms bringing torrential rain and hail – are more likely to occur in certain regions as a result of climate change.”
The reinsurer said that the high number of flood events, including river flooding and flash floods, was exceptional and accounted for 34% of overall losses, compared with an average of 21% over the past 10 years.
2016 losses totalled US$175bn, two-thirds more than in 2015, and very nearly as high as the figure for 2012 (US$180bn). The share of uninsured losses – the so-called protection or insurance gap – remained substantial at around 70%. Almost 30% of the losses, some US$50bn, were insured.
Board of Management member Torsten Jeworre, said: “The high percentage of uninsured losses, especially in emerging markets and developing countries, remains a concern. Greater insurance density is important, as it helps to alleviate the financial consequences of a catastrophe for more people. With its risk knowledge, the insurance industry would in fact be able to bear a much greater portion of such unpredictable risks.”
Key natural catastroph figures of 2016:
• Both overall losses and insured losses were above the inflation-adjusted average for the past ten years (US$ 154bn and 45.1bn respectively).
• Taking very small events out of the equation, 750 relevant loss events such as, storms, floods, droughts, heatwaves and earthquakes were recorded in the Munich Re NatCatSERVICE database. That is significantly above the 10-year average of 590.
• Some 8,700 lives were sadly lost as a result of these natural catastrophes, far fewer at least than in 2015 (25,400), yet within the ten-year average (60,600). The past year was thus the year with the fewest fatalities (after 2014, with 8,050 fatalities) in 30 years (1986: 8,600).
• The high number of flood events, including river flooding and flash floods, was exceptional and accounted for 34% of overall losses, compared with an average of 21% over the past ten years.
The costliest natural catastrophes of the year occurred in Asia. Aside from two earthquakes on the southern Japanese island of Kyushu in April (overall losses US$ 31bn; proportion of insured losses just under 20%), there there were devastating floods in China in June and July (overall losses US$ 20bn; only some 2% of which were insured).
North America was hit by more loss occurrences in 2016 than in any other year since 1980, with 160 events recorded. The year’s most serious event here was Hurricane Matthew. Its greatest impact was in the Caribbean island nation of Haiti, which was still struggling to recover from the 2010 earthquake. Matthew killed around 550 people in Haiti, and also caused serious damage on the east coast of the USA. Overall losses totalled US$ 10.2bn, with over a third of this figure insured.
North America was also impacted by other extreme weather hazards, including wildfires in the Canadian town of Fort McMurray in May, and major floods in the southern US states in summer. In Canada, the mild winter with less snow than usual, and the spring heatwaves and droughts which followed, were the principal causes of the devastating wildfires that hit the oil-sand-producing region of Alberta, generating overall losses of US$ 4bn. More than two-thirds of this figure was insured. In August, floods in Louisiana and other US states following persistent rain triggered losses totalling US$ 10bn, around a quarter of which was insured.
There was a series of storms in Europe in late May and early June. Torrential rain triggered numerous flash floods, particularly in Germany, and there was major flooding on the River Seine in and around Paris. Overall losses totalled some US$ 6bn (approximately €5.4bn), around half of which was insured.
Peter Höppe, Head of Munich Re’s Geo Risks Research Unit, said: “A look at the weather-related catastrophes of 2016 shows the potential effects of unchecked climate change. Of course, individual events themselves can never be attributed directly to climate change. But there are now many indications that certain events – such as persistent weather systems or storms bringing torrential rain and hail – are more likely to occur in certain regions as a result of climate change.”
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