2017 nat cat losses sets challenges for market, claims Aon Benfield report
A new report from Impact Forecasting, Aon Benfield's catastrophe model development team claims that although losses for the first have of the year have been lower than average, they have still posed challenges for the insurance market.
“The financial toll from natural catastrophe events during the first six months of 2017 may not have been historic, but it was enough to lead to challenges for governments and the insurance industry around the world,” said Steve Bowen, Impact Forecasting director and meteorologist. “This was especially true in the United States after the insurance industry faced its second-costliest first half on record following a relentless six months of hail-driven severe weather damage.
“In fact, nearly eight out of ten monetary insurance payouts for global disasters were related to the severe convective storm peril. Other events – such as Cyclone Debbie in Australia, flooding in China and Peru, wildfires in South Africa, and a series of windstorms in Europe – led to notable economic damage costs. As we enter the second half of the year, much of the focus will be on whether an El Niño officially develops. Such an event could have a prominent influence on weather patterns and associated disaster risks.”
The Global Catastrophe Recap: First Half of 2017 report said that insured losses were preliminarily estimated at $22 billion – 35 percent lower than the 10-year average of $34 billion, and 12 percent lower than the 17-year average of $25 billion.
Global economic losses from natural disasters for the first half of 2017 came to an estimated $53 billion – 56 percent lower than the 10-year average of $122 billion and 39 percent lower than the 17-year average of $87 billion.
According to the report, the severe convective storm (SCS) peril was the costliest disaster type on an economic basis (nearly $26 billion) during the period under review, comprising 48 percent of the loss total, with the majority of the loss ($23 billion) attributable to events in the United States. SCS also caused the majority of insurance losses ($17+ billion), comprising 78 percent of the loss total and with nearly $16 billion attributable to widespread hail, damaging straight-line winds, and tornadoes in the US.
Natural disasters claimed at least 2,782 lives during the first six months of 2017, the lowest figure since 1986 and significantly below the long-term (1980-2016) average of 40,867. Flooding was the deadliest peril during the period, being responsible for at least 1,806 deaths.
The report highlights that the US recorded 76 percent of the global losses sustained by public and private insurance entities during the first half of 2017, while EMEA (Europe, Middle East & Africa) and Asia-Pacific (APAC) each accounted for 10 percent. The Americas made up four percent of the global insured loss total.
Around 42 percent of first half 2017 global economic losses were covered by insurance, above both the near- and medium-term average of 32 percent and due to the fact that the majority of losses occurred in the US. However, insurance take-up rates continued to grow in other areas, notably Asia-Pacific and the Americas.