January 13, 2016 by Canadian Underwriter
Insured losses for global natural disasters in 2015 were 31% below the 15-year average of US$51 billion, the lowest annual insured loss total since 2009, Aon Benfield’s catastrophe model development team said on Wednesday.
According to Impact Forecasting’s Annual Global Climate and Catastrophe Report, which evaluates the impact of natural disaster events that took place worldwide in 2015, there were 300 separate global natural disasters last year, compared to the 15-year average of 269 events. [click image below to enlarge]
The 300 events caused a combined total insured loss of US$35 billion, the report said. The costliest event for insurers was a February winter storm that impacted much of the eastern United States and resulted in public and private insurance payouts of more than US$2.1 billion. In Canada, drought caused US$1 billion in economic losses and US$600 million in insured losses.
Global economic losses from natural catastrophes in 2015 stood at US$123 billion – 30% below the 15-year average of US$175 billion. There were 14 multi-billion dollar economic loss events around the world, with the costliest being forest fires that burned out of control in Indonesia. At US$16.1 billion, the World Bank noted that the economic loss from the fires represented 1.9% of the country’s GDP, the report noted.
“Global insured property catastrophes in 2015 accounted for just 28% of economic losses, in-line with the 10-year average of 29%,” said Stephen Mildenhall, chairman of Aon Analytics, in a statement. “In many regions, economic catastrophe losses are very material relative to national GDP and yet are insured at much lower levels than in the United States and Europe.”
Of the top five economic losses, Mildenhall continued, four occurred outside the U.S. “and yet none of these was a top 10 insured loss owing to low insurance penetration in the affected countries. With its abundant capital and sophisticated risk management tools, the industry should drive its own growth by better delivering on its core mission of providing critical risk transfer products to enable stable economic development in all regions of the world.” [click image below to enlarge]
The study revealed that the three costliest perils – flood, severe thunderstorm, and wildfire – accounted for 59% of all economic losses during the 12 months under review. The deadliest event of 2015 was the magnitude-7.8 earthquake and subsequent aftershock that struck Nepal in April and May, killing more than 9,100 people and costing the nation and surrounding countries an estimated US$8 billion in damage and reconstruction.
“While a notable uptick in recorded natural disaster events did not directly translate to greater financial losses in 2015, the year was marked by 31 individual billion-dollar disasters, or 20% more than the long-term average,” said Steve Bowen, associate director and meteorologist at Impact Forecasting, in the statement. “For just the fourth time since 1980, there were more than 30 such events in a year.”
Bowen noted that Asia once again incurred the greatest overall economic losses, representing 50% of the world total and four of the five costliest events. Despite the fact that 32% of global economic losses occurring in the U.S., it accounted for 60% of the insured loss, highlighting the high level of insurance penetration, the statement said. The U.S. also accounted for seven of the top 10 costliest insured events. As well, by the end of 2015, the U.S. had extended its record to 10 consecutive years without a major hurricane landfall.
The statement noted that 2015 replaced 2014 as the warmest year since the recording of global land and ocean temperature began in 1880. The strongest El Niño in decades had definitive impacts on global weather patterns during the second half of 2015 that led to costly flood, tropical cyclone and drought events. “These impacts will linger into the first half of 2016, and ironically enough, we could be discussing impacts from La Niña at this time next year,” Bowen said.
Overall, the top 10 insured loss events in 2015 comprised of five severe thunderstorm outbreaks in the U.S., one U.S. winter storm, one European windstorm, one Indonesian forest fire and one U.S. drought. No region of the world sustained aggregate insured losses above its 15-year average in 2015, the report concluded, though EMEA, Asia Pacific and the Americas (non-U.S.) were all above their respective medians.