Canadian Underwriter

January winter weather causes US$4 billion loss to global economy: Impact Forecasting

February 9, 2016   by Canadian Underwriter

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A powerful winter storm in the eastern United States during the second half of January is estimated to cost US$2 billion in economic losses, according to Aon Benfield’s catastrophe model development team.

The storm in the eastern U.S. in January killed 58 people. Photo: @jenkers_en

The storm brought heavy snowfall, high winds, coastal flooding, freezing rain, ice, sleet and severe thunderstorms to the eastern U.S. during the second half of January, killing 58 people and injuring dozens of others, Impact Forecasting said in the January edition of its monthly Global Catastrophe Recap report.

States of emergency were declared in 11 states and Washington, D.C. as the event was rated the fourth-largest winter storm in the Northeast and Mid-Atlantic since the 1950s by the National Oceanic and Atmospheric Administration. While total economic losses were tentatively estimated to exceed US$2.0 billion, insured losses both from private and public entities were projected to reach “well into the hundreds of millions,” Impact Forecasting added in a statement.

For the remainder of North America, “no significant natural disaster events occurred during the month of January,” the report said.

In East Asia, a prolonged period of Arctic cold and snowfall covered much of that portion of the continent, causing significant damage and impacting travel. At least 116 people were killed across Taiwan, Thailand, Japan, South Korea and China. Total combined economic losses from the event were cited at nearly US$2 billion, with China incurring US$1.6 billion of the total cost. 

“Winter in the Northern Hemisphere was on full display to begin 2016, with several winter storm events impacting parts of the United States, Asia and Europe,” said Adam Podlaha, head of Impact Forecasting, in the statement. “Despite winter weather historically not being one of the costliest perils when compared to tropical cyclones or flooding, these winter events can still pose billion-dollar costs to the global economy. The peril continues to be of interest to the insurance industry as claims resulting from heavy snow or ice often quickly accumulate.” [click image below to enlarge]

States of emergency were declared in 11 states and Washington, D.C. as the storm was rated the in the U.S. Northeast and Mid-Atlantic since the 1950s

Further natural hazard events that occurred during January include:

• Windstorm Marita, also known locally as Gertrude, which impacted areas of the United Kingdom, Ireland and Scandinavia, resulting in total economic and insured losses expected to exceed US$100 million;

• A series of Pacific storm systems fuelled by El Niño, which brought heavy rainfall, snow and isolated severe weather to portions of California in early January. Total economic losses were estimated to exceed US$125 million; while public and private insurers listed payouts in excess of US$65 million;

• Heavy rains, which impacted parts of Brazil and Ecuador, killing at least 12 people and destroying more than 15,000 homes. Total combined economic losses were in excess of US$110 million;

• A magnitude-6.7 earthquake, which struck northeast India on Jan. 3, killing at least 22 people and injuring around 300 others. Total economic losses were more than US$75 million;

• The Waroona Fire in Western Australia, which killed at least two people and destroyed 180 structures in the hardest-hit communities of Yarloop, Waroona, Hamel, and Cookenup. The Insurance Council of Australia declared cited insured losses minimally at US$42 million; and

• Drought conditions in South Africa, which caused agricultural damage of approximately US$250 million.