Over 60 percent of the $76 billion in global insured losses from natural catastrophes in 2018 resulted from so-called “secondary” perils - small-to-mid sized events or secondary effects of a primary peril, a Swiss Re sigma study has shown.
2018’s insured losses represented the fourth highest in Swiss Re’s sigma records, and the combined insured cat losses for 2017-2018 were $219 billion, the highest ever on a two-year period.
“The catastrophe loss experience of the last two years is a wake-up call for the insurance industry, highlighting a trend of growing devastation wreaked by so-called ‘secondary’ perils,” Swiss Re said.
Swiss Re’s report showed that secondary perils come in two forms. The first are independent, high-frequency, low-to-medium severity loss events, for example river floods, torrential rainfall, landslides, thunderstorms, winter storms, drought and wildfire outbreaks. The second are events that occur as secondary effects of a primary peril, for example hurricane-induced precipitation, storm surges, tsunamis, liquefaction and fire following earthquakes.
2017 featured the highest ever aggregate natural disaster insurance claims in a single year - and over half were due to secondary perils.
Swiss Re explained that losses from secondary perils are rising due to urbanisation, a rising concentration of assets in areas exposed to extreme weather conditions, and climate change.
“Insurers need to focus more on primary and secondary perils to be able to underwrite catastrophe business sustainably and build global resilience,” Swiss Re added.
Swiss Re, Perils, Catastrophe, Reinsurance, Bermuda, Europe, Global