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• Total economic losses from natural catastrophes and man-made disasters are estimated to be USD 158 billion in 2016
• Insured losses from disaster events were around USD 49 billion
• Approximately 10 000 people lost their lives in disaster events in 2016
• Earthquakes, hail and thunderstorms, and Hurricane Matthew resulted in the largest insurance losses in 2016

Total economic losses from natural and man-made disasters in 2016 were at least USD 158 billion. This is significantly higher than the USD 94 billion losses in 2015 and was caused by large natural catastrophes, such as earthquakes and floods, according to preliminary sigma estimates. Insured losses were also higher in 2016 at around USD 49 billion, compared to USD 37 billion in the previous year. However, the gap between total losses and insured losses in 2016 shows that many events took place in areas where insurance coverage was low. Losses resulting from man-made disasters fell to USD 7 billion from USD 9 billion in 2015. Globally, there were approximately 10 000 victims in disaster events in 2016.
Natural catastrophes accounted for USD 150 billion of the total economic losses in 2016. Insured losses from natural catastrophe events were USD 42 billion in 2016, up from USD 28 billion in 2015, but slightly below the annual average of the previous 10 years (USD 46 billion). Man-made disasters triggered an additional USD 7 billion in insurance claims in 2016.
Earthquake losses reveal schisms in insurance coverage needs
There were a number of major earthquakes across the world in 2016, for example in Taiwan, Japan, Ecuador, Italy and New Zealand. Among the largest was the 7.0-magnitude quake that struck the Kumamoto prefecture in Japan on 16 April 2016, part of a series of strong shocks and aftershocks in the region. The quakes resulted in extensive structural damage, fires and collapsed buildings, and claimed 137 lives. The total economic cost was at least USD 20 billion, of which USD 5.0 billion was insured. The Kumamoto quakes were the costliest disaster event globally of the year.
Later in the year, central Italy was struck by an earthquake in August destroying some small towns and killing 299 people. There were other strong quakes in October which added to the destruction, but no loss of life. Government sources estimate that the overall reconstruction cost for the August earthquake alone will be as high as USD 5 billion. Insured losses for that event, however, are only a fraction of the total, estimated at USD 70 million,¹  mainly from commercial assets.
“Society is underinsured against earthquake risk,” Swiss Re Chief Economist Kurt Karl says. “And the protection gap is a global concern. For example, Italy is the 8th largest economy in the world, yet only 1% of homes in Italy are insured against earthquake risk. Most of the reconstruction cost burden of this year’s quakes there will fall on households and society at large.”

Hurricane Matthew and severe storms in the US generate high losses
In October, Hurricane Matthew caused devastation across the east Caribbean and southeastern US. Economic losses were USD 8 billion, with insured losses estimated to be in excess of USD 4 billion. Hurricane Matthew was the strongest of the season and also the deadliest natural catastrophe of the year globally, claiming up to 733 lives, most of those lost in Haiti.
There were a number of severe weather events in the US in 2016, including a series of severe hail and thunder storms. The costliest was a hailstorm that struck Texas in April, resulting in economic losses of USD 3.5 billion and insured losses of USD 3 billion, as large hailstones inflicted heavy damage to property. “In this case, because households and businesses were insured, they were much better protected against the financial losses resulting from the storms,” Kurt Karl continues.
Widespread flooding in the US, Europe and Asia
Several large-scale flood events hit the US in 2016. The biggest was in August when heavy rains caused widespread flooding in Louisiana and Mississippi. The economic losses from this event totaled USD 10 billion, while private insured losses were at least USD 1 billion.²
Europe and Asia also experienced heavy flooding. In Europe in late May and early June, two slow-moving low-pressure systems caused thunderstorms, flash floods and river flooding, with France and Germany hit the most. The storms and floods led to total losses of USD 3.9 billion, and insured losses of USD 2.9 billion. In Asia, heavy rains throughout the year led to severe floods in China and other countries. According to public sources, total economic losses from flooding along the Yangtze River were at least USD 16 billion.
Wildfires spark biggest-ever loss for Canada’s insurance industry
Wildfires in Canada were another cause of large insurance losses in 2016.  The cause of the wildfires is still under investigation, and could be the result of human activity.³  Due to dry conditions and strong winds, once triggered, fires spread rapidly through the forests of Alberta. The town of Fort McMurray was evacuated, and many homes there were completely destroyed. Economic losses were USD 3.9 billion. The area is the heart of Canada’s oil sands production with a high concentration of insured economic assets. As such, the insured losses were around USD 2.8 billion. This is one of the costliest wildfire events in insurance industry history, and it is the biggest loss the Canadian insurance sector has ever experienced.

Loss estimates in this release can still be subject to revision.

Notes to editors

Accessing data by sigma:
The data from the study can be accessed and visualised at www.sigma-explorer.com. This mobile enabled web-application allows users to create charts, share them via social media and export them as standard graphic files.
Swiss Re
The Swiss Re Group is a leading wholesale provider of reinsurance, insurance and other insurance-based forms of risk transfer. Dealing direct and working through brokers, its global client base consists of insurance companies, mid-to-large-sized corporations and public sector clients. From standard products to tailor-made coverage across all lines of business, Swiss Re deploys its capital strength, expertise and innovation power to enable the risk-taking upon which enterprise and progress in society depend. Founded in Zurich, Switzerland, in 1863, Swiss Re serves clients through a network of around 70 offices globally and is rated “AA-” by Standard & Poor’s, “Aa3” by Moody’s and “A+” by A.M. Best. Registered shares in the Swiss Re Group holding company, Swiss Re Ltd, are listed in accordance with the International Reporting Standard on the SIX Swiss Exchange and trade under the symbol SREN. For more information about Swiss Re Group, please visit: www.swissre.com or follow us on Twitter @SwissRe.
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¹ Perils AG
² The private insured loss estimate does not include the losses covered by the National Flood Insurance Program.
³ In this release, the wildfires in Canada are counted as natural catastrophe losses.

ExxonMobil has been under SEC investigation since August, by David Dayen, December 12, 2016
Most of the commentary over Donald Trump’s presumed secretary-of-state nominee Rex Tillerson concerns the Exxon Mobil CEO’s closeness to Russia, and Senate Republican discomfort with that relationship. But Trump and Tillerson share something else that hasn’t gotten as much attention—a penchant to rip off their business partners.
In ExxonMobil’s case, I’m talking about shareholders. Tillerson’s company has been under formal investigation by the Securities and Exchange Commission since August for failing to accurately value its proven oil reserves.Those reserves are critical to investors for assessing the future viability of the company. Without the certainty that the company can keep crude oil flowing decades into the future, ExxonMobil stock would plummet. Rewriting the disclosures to investors with lower valuations would cost the company billions of dollars. And actually the entire oil and gas industry would be affected by a new standard rather than the current ad hoc system.
The investigation is a kind of companion piece to the “Exxon Knew” campaign, which charges that the world’s largest publicly traded oil company was aware of the catastrophic effects of climate change nearly 40 years ago, but lied to shareholders about these risks to its business model. Attorneys general in over a dozen states have opened investigations into these matters.
But the SEC probe goes further. The agency requested documents from PricewaterhouseCoopers, ExxonMobil’s auditor, looking at how the company accounts for future costs from global climate regulations. If it becomes more costly to initiate drilling because of the so-called “price of carbon,” or regulations that mandate reductions to greenhouse gas emissions, Exxon might have to shelve the projects, taking a hit to future profitability. Even if the United States dumps the Paris climate accord (something a Secretary of State Tillerson may be in position to influence), Exxon does business worldwide, including with countries who would be likely to stay in the pact and work to cut emissions. Public companies must account in their financial disclosures for knowable risks to investors, and climate regulations would certainly fit the bill for an oil giant.
The SEC also wants to know why ExxonMobil does not write down the value of its reserves when oil prices drop. The crash began two years ago; a barrel of oil fetched $115 in June 2014, but under $28 by February. Even with the recent announcement of OPEC production cuts, the price has barely crested $50. But ExxonMobil never factored that loss into its calculations of future reserves; by contrast, Chevron has written down $50 billion. Exxon said in October it could “de-book” about 20 percent of its reserves if prices remain low, but it hasn’t done it yet.
Exxon claims that it doesn’t overstate its reserves (which at the end of 2015 totaled 24.8 billion oil-equivalent barrels) and book those values conservatively. “Our financial reporting meets all legal and accounting requirements,” said spokesman Alan Jeffers in September. But if the company was found to be touting phantom future profits, it would surely be committing securities fraud against investors.
The problem is that getting smoking-gun information about often-byzantine oil and gas accounting will prove difficult. And that’s made more difficult if the CEO of ExxonMobil holds a major cabinet position.
The man who wants to appoint him, Trump, will also have the opportunity to remake the SEC. Since his election, seven top officials have announced their resignations, from chair Mary Jo White to Enforcement Division chief Andrew Ceresney to the leader of the section with primary responsibility over reviewing corporate filings, Division of Corporation Finance head Keith Higgins.
This turnover isn’t necessarily a bad thing—the SEC’s record over Obama’s second term has been so weak that liberals have repeatedly demanded mass firings. But Trump will get to appoint three new SEC commissioners (two seats on the five-member panel were already vacant before White’s resignation announcement), and that new executive team will hire the top leadership. So the president-elect could make sure that ExxonMobil has little to fear from the SEC, whether or not Tillerson makes it to Foggy Bottom.
I’d assume that deceiving investors is a résumé-builder for a Trump administration post, and I wouldn’t expect this issue to be a major factor in Tillerson’s confirmation process. But it’s notable nonetheless, especially if it’s true that climate risk has not been properly priced on Wall Street. Trump over the weekend called the free market the dumb market, and here’s a way it’s made dumb, through accounting deception that promises endless fossil-fuel burning without any threat to sustainability.
Source: The Nation