Insurers face near-term $100bn-plus Nat CAT loss per year
Source: Middle East Insurance Review | Dec 2021
Nat CAT losses are likely to cost the insurers an average of around $106bn annually in the short term. This compares with $75bn Nat CAT losses a year during the past decade.
A new study by AIR Worldwide 2021 Global Modelled Catastrophe Losses confirms that the recent heavy losses are not outliers and that there is a greater than 40% chance the insurance industry will experience losses of more than $200bn in the next decade.
According to AIR Worldwide, “This is a stark reminder that we have been fortunate to not have had a major tropical cyclone or earthquake event in a highly populated region. However, such events can and will occur under the climatic conditions of today, and society must continue to focus on ensuring resilience to the risks of today while also looking forward to how risk may change in the decades ahead.”
The report said the insured losses in Europe will average about $16.6bn and $66bn in North America while Asia is expected to see average annual Nat CAT claims of $15bn, Latin America $5.6bn and Oceania $3bn.
Global economic losses from CATs are estimated to be about three times higher than global insured losses, at about $320bn a year on average.
The research revealed that the percentage of insured economic loss varies considerably between regions. In North America, about 50% of the economic loss from natural disasters is insured, while in Asia and Latin America only about 12% and 24% of economic losses are covered.
The portion of economic losses that is insured also varies significantly by peril, with coverage for flood and earthquake losses typically much lower than for risk from wind and fire. M