2016 was the costliest year for natural catastrophe losses since 2012, with $175 billion in damages, of which only 30 percent – or $50 billion – was insured, Munich Re claims in a new report.
The total losses were two-thirds higher year-on-year, and were nearly as high as the figure of $180 billion for 2012.
However, the reinsurer pointed out that the protection gap remains substantial, with the share of uninsured losses at 70 percent.
“After three years of relatively low nat cat losses, the figures for 2016 are back in the mid-range, where they are expected to be. Losses in a single year are obviously random and cannot be seen as a trend”, said Torsten Jeworrek, member of the board of management at Munich Re.
“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.”
The report also showed that both the overall losses and insured losses in 2016 were above the inflation-adjusted average for the past ten years – $154 billion and $45.1 billion respectively.
Munich Re’s NatCatSERVICE database recorded 750 relevant loss events such as earthquakes, storms, floods, droughts and heatwaves, significantly above the ten-year average of 590.
Taking very small events out of the equation, 750 relevant loss events such as earthquakes, storms, floods, droughts and heatwaves were recorded in the Munich Re NatCatSERVICE database. That is significantly above the ten-year average of 590.
34 percent of the overall losses were attributed to flood events, again much higher than the average of 21 percent over the past decade.
The costliest natural catastrophes of the year occurred in Asia, with the two earthquake on the southern Japanese island of Kyushu close to the city of Kumamoto in April, with overall losses of $31 billion with just under 20 percent of that insured.
The second costliest event were the floods in China in June and July, with overall losses at $20 billion, only two percent of which were insured.
Hurricane Matthew, although not as impactful as anticipated, still resulted in losses of $10.2 billion, with over a third of this figured insured.
The wildfires in the Canadian town of Fort McMurray generated losses of $4 billion in the region of Alberta, with more than two-thirds of this figure insured.
Peter Höppe, head of Munich Re’s geo risks research unit, added: “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.”
Munich Re, Catastrophe, North America, Asia Pacific, Europe, Earthquakes, Floods, Hurricanes