December 18, 2015 by Canadian Underwriter
Preliminary sigma estimates indicate total global economic losses from natural catastrophes and man-made disasters will total approximately US$85 billion in 2015, but just US$32 billion in insured losses, Swiss Re reported on Friday.
Insured losses from natural catastrophes were lower than in 2014, while man-made losses were higher, Swiss Re said in a press release. The explosions at the Port of Tianjin in China are expected to lead to the year’s biggest insured loss, and the biggest man-made insured loss in Asia ever. In total, approximately 26,000 people lost their lives in disaster events this year, double the amount in 2014.
In 2015, total economic losses are estimated to reach US$85 billion, down from US$113 billion in 2014 and the previous 10-year loss average of US$192 billion. Natural catastrophes caused US$74 billion in losses and man-made disasters caused the remaining US$11 billion, Swiss Re said in the release. Of the total economic losses, US$32 billion were insured (vs. US$35 billion the year before), with US$23 billion triggered by natural disasters, down from US$28 billion in 2014. This is also below the annual average of US$55 billion for the previous 10 years of natural catastrophe insured losses, the company said.
Losses were caused by various severe natural catastrophes across different perils in 2015, including windstorms, hurricanes, earthquakes, flooding and wildfires. A February winter storm in the United States was the largest loss-making natural disaster of the year, resulting in insured losses of more than US$2 billion. But low activity during the North Atlantic hurricane season kept the total global insured loss low.
Large disasters occurred in many other parts of the world also, contributing to the doubling of the total number of fatalities to approximately 26,000 in 2015. In April, a magnitude 7.8 earthquake struck Nepal and neighbouring countries, triggering a humanitarian catastrophe: about 9,000 people lost their lives and approximately 500,000 houses were destroyed. Economic losses are estimated to be more than US$6 billion, of which only around US$160 million are insured, owing to the country’s low insurance penetration, Swiss Re said. [click image below to enlarge]
As well, 2015 is likely to pass as the warmest on record, according to the World Meteorological Organization. Exceptionally high temperatures and lack of rainfall caused drought, wildfires and heatwaves in many regions. More than 5,000 people died in waves of extreme temperatures throughout the summer season in India, Pakistan, Europe, North Africa and the Middle East. In India and Pakistan, temperatures soared to above 48°C in May and June, the highest recorded since 1995, claiming over 3,000 victims, Swiss Re said.
“It was another year of many disaster events, sadly resulting in a high number of victims,” said Kurt Karl, chief economist at Swiss Re in the release. “The overall economic impact of these events was devastating in the areas affected. Often these areas are the least equipped and have a low level of insurance penetration.”
Swiss Re said that man-made disasters triggered US$9 billion in overall insurance losses in 2015, up from US$7 billion in 2014.
The costliest event this year was the series of explosions at a storage facility in the Port of Tianjin in northeastern China on Aug. 12. The explosions claimed 173 lives and injured many more, as well as damaging and destroying vehicles, shipping containers, production facilities and surrounding property. “The insured loss estimate is subject to a high degree of uncertainty due to the many different lines of business and coverage impacted, including potentially contingent business interruption,” Swiss Re said in the release. Initial indications suggest claims of at least US$2 billion, making the incident the largest ever man-made loss event in Asia for the insurance industry. Fires and explosions at other industrial sites and energy facilities in different regions added around US$3 billion to the overall man-made insured tally.