Historic US derecho causes $5bn of economic damage in August: Aon

14-09-2020

An historic derecho in the US left a multi-billion-dollar insurance pay-out to property and agribusiness owners, contributing to what Aon described as an “impactful month of weather disasters” in August. 

In the latest edition of Aon’s monthly Global Catastrophe Recap report, which evaluates the impact of the natural disaster events that occurred worldwide during August 2020, Aon noted re/insurers had to contend with catastrophes that went beyond tropical cyclone activity. 

The derecho event in the US occurred on August 10 and killed at least four people, resulting in extensive Midwest property and agribusiness damage. The derecho occurred as part of a broader synoptic pattern from August 8-12 that was estimated to cause more than $6.5 billion in economic damage. 

Insurers are expected to cover more than half of the total. At least $5 billion was attributed to the derecho alone.

Meanwhile, record heat, low humidity, and widespread dry lightning spawned nearly 1,000 fires in California during the month. The fires killed at least eight people and destroyed thousands of structures, leading to an insurance pay-out expected to exceed $1 billion. The fires have further persisted into early September.

Meanwhile, with the Atlantic hurricane season in full swing, Hurricane Laura killed at least 33 people after making landfall in Louisiana on August 27. Laura came ashore at peak intensity after tying the record for the fastest intensification rate in the Gulf of Mexico during a 24-hour period. It tied as the strongest hurricane to make landfall in Louisiana since 1856. 

Total economic losses were minimally listed at $10 billion, but are likely to be higher, Aon said. The portion covered by public and private insurance entities is also expected to result in a notable multi-billion-dollar pay-out.

Hurricane Isaias made landfall near North Carolina, causing notable coastal and inland water and wind damage, and spawning at least 39 tornadoes. More than six million homes and businesses lost power due to the storm, as total economic losses were estimated at $5 billion, of which slightly more than half is expected to be insured. 

Globally, nine tropical cyclones made landfall in August, resulting in combined economic costs of near $20 billion, Aon added. 

Steve Bowen, director and meteorologist on the impact forecasting team at Aon, said: “North America and Asia endured another impactful month of weather disasters in August. Tropical cyclones, severe convective storms, and wildfires all left numerous financial and humanitarian challenges in their wake as the globe continues to deal with implications stemming from the COVID-19 pandemic.”

Bowen noted that record seasonal monsoon flooding in parts of Asia had highlighted the significant protection gap that still exists in highly vulnerable and exposed areas.

Seasonal monsoon rains throughout August enhanced ongoing floods in central and northern parts of the greater Yangtze River basin in China. In August alone 92 people were killed and more than 310,000 homes were damaged or destroyed.

Heavy rain in Bangladesh caused flooding and landslides causing damage to around 1.3 million homes and around 258,000 hectares (640,000 acres) of cropland. The associated economic losses were estimated at $160 million. 

India has also been hit by heavy monsoon rains, with the Disaster Management Division, Ministry of Home Affairs, India, estimating that up to 150,000 houses and tens of thousands of other structures have been damaged or destroyed. The death toll since June 1 stands at 1,670, of which 600 casualties were noted in August alone. 

Nearly 21 million people were directly affected by the floods, and more than 1.1 million hectares (2.8 million acres) of cropland were inundated across 25,000 villages, with damages expected to be more than $2 billion.

Aon, Steve Bowen, Catastrophe

Bermuda Re