30 July 2019News

Global natural disaster losses down on long term average in H1

Overall global losses related to natural disasters were lower than the long-term average for the period in H1 2019, according to Munich Re, despite many regions seeing particularly savage natural disasters.

Insured losses came to $15 billion, comfortably below the long-term average of $18 billion, said Munich Re. The insured portion of the overall economic loss for many events was extremely small due to low insurance penetration in many affected countries, it added.

In all, 370 loss events produced overall losses of $42 billion in the first six months of the year, said the reinsurer. After adjusting for inflation this is lower than the 30-year average of $69 billion, it said.

However, losses from severe floods in southeast China starting in June, which reportedly caused billions of dollars in damage, are not included in Munich Re’s figures.

In May, thunderstorms with tornadoes in the Midwestern US produced the heaviest losses, of $3.3 billion. Of this, around $2.5 billion was insured.

But three of the five costliest disasters affected emerging and developing countries: a flood disaster in Iran, creating overall losses of $2.5 billion; storm and flood losses from Cyclone Fani in India and Bangladesh in May, which caused losses of $2.2 billion; and Cyclone Idai in Mozambique in March, which caused overall losses in Mozambique and neighbouring countries of $2 billion. Losses in Mozambique alone were equivalent to around one tenth of its GDP.

Ernst Rauch, chief climate and geoscientist at Munich Re, noted that in the Caribbean, governments and development banks have collaborated to help provide insurance products to manage this risk. He called on institutions to provide similar assistance for countries like Mozambique.

The US tornado season was considerably more active than usual, noted Munich Re, particularly in May. According to the National Oceanic and Atmospheric Administration, the US weather service, over 1,200 tornadoes were counted by the end of June, around 20 percent more than the 2005–2015 average for the same half-year period. But losses were only $7.5 billion, well below the $10 billion average for the period over the past decade.

In Europe, a combination of high temperatures and severe thunderstorms produced heavy losses in June, with overall losses coming to €900m, of which more than 75 percent was insured. Almost all of these losses were sustained in Germany, Munich Re added.

The Asia/Pacific region saw overall losses of $16 billion, compared to a long term average of $33 billion. This damage was caused by a range of natural disasters, the costliest for insurers being severe flooding in Queensland, producing losses of almost $2 billion, of which just under $1 billion was insured.

Rauch said: “A number of scientific studies indicate that heatwaves are increasing due to climate change, and hailstorms as well according to the most recent studies. In view of the loss potentials and the increase in exposed assets, it is very important that insurers are aware of these changes.”

Around 4,200 people lost their lives in natural disasters globally, a small decrease on the approximately 4,300 fatalities recorded in the same period of 2018, maintaining a downward trend. The 30-year average for H1 natural disaster fatalities is more than 27,000.