Global insured losses from disaster events in 2017 were around US$136 billion, up from $65 billion in 2016, well above the previous 10-year annual average ($58 billion), and the third highest on sigma records, said Swiss Re.
Nat CATs accounted for $131 billion of last year’s insured losses, and man-made disasters for the remaining $5 billion, according to preliminary sigma estimates. Total economic losses soared in 2017 to $306 billion from $188 billion in 2016. The accumulation of economic and insured losses ramped up in the second half of the year, due primarily to the three hurricanes – Harvey, Irma and Maria – that hit the US and the Caribbean, and wildfires in California. Globally, more than 11,000 people have died or gone missing in disaster events in 2017, similar to 2016.
“In recent years, annual insurance losses from disaster events have exceeded $100 billion a few times”, said Mr Martin Bertogg, Head of Catastrophe Perils at Swiss Re. “The insurance industry has demonstrated that it can cope very well with such high losses. However, significant protection gaps remain and if the industry is able to extend its reach, many more people and businesses can become better equipped to withstand the fallout from disaster events.”
A year of two halves
Extreme weather in the US in the second half of 2017 has been the main cause of the high number of full-year insured losses. In the first half, losses resulting from disaster events were lower than in the same period of 2016, and well below the annual six-month average of the previous 10 years.
In August and September, three category 4+ hurricanes – Harvey, Irma, and Maria (HIM) – made landfall in the US. Destruction from the three hurricanes stretched from the Texas coast (Harvey) through West Florida to the Caribbean (Irma and Maria), together causing insured losses estimated to be almost $93 billion. Given the vast geographic footprint of the hurricanes, which affected multiple locations in quick succession and impacted multiple lines of business, a full assessment of the insured losses is still ongoing at the time of reporting. The economic losses from the three events will be much higher given the significant flood damage – often uninsured – from Hurricane Harvey in densely populated Houston, Texas, an extended power outage in Puerto Rico after Hurricane Maria, and post-event loss amplification.
After 12 years with no major hurricane 3 making US landfall, HIM have made 2017 the second costliest hurricane season on sigma records after 2005, the report noted.
Also in the second half of 2017, hot and dry weather in California created favourable conditions for wildfires to ignite and spread to urban areas. There were three major fire events in October in Northern California: Tubbs, Atlas and Mendocino Lake. Both residential and commercial property (including vineyards) were impacted. According to preliminary estimates from Property Claims Services, the major fire events triggered combined insured property losses of $7.3 billion. Fires were still raging in Southern California in December at the time of writing, and the as-yet undetermined full-year losses from wildfires will likely be higher.
Other extreme weather in the US also led to a high number of severe convective storms (thunderstorms), with five separate severe thunderstorm events from February to June causing insured losses of more than $1 billion each.
Losses in other regions
In mid-September, two powerful earthquakes in Tehuantepec and Puebla, Mexico, led to numerous building collapses, claiming a large number of victims and resulting in insured losses of more than $2 billion.
In late March 2017, category 4 tropical Cyclone Debbie hit the northeastern coast of Australia. Wind gusts of up to 263 km/h and widespread flooding in central and southeast Queensland and northeast New South Wales led to insured losses of $1.3 billion.
At the end of April, Europe suffered a cold snap, followed by a summer of heat waves and record temperatures in several locations, making 2017 a year of weather extremes.
Further, severe floods in Southeast Asia caused large devastation and, sadly, a large number or victims, the report said. M