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Total worldwide economic losses for first half of 2016 at US$70 billion, up US$11 billion from 2015 half-year totals: Munich Re


July 12, 2016   by Canadian Underwriter


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Total worldwide economic losses for the first half of 2016 were US$70 billion, of which US$27 billion were insured, significantly higher than the first year losses of US$59 billion in 2015, of which US$19 billion were insured, Munich Re said on Tuesday.

FILE - Burned out houses are shown in the Abasands neighbourhood during a media tour of the fire-damaged city of Fort McMurray, Alta., in a May 9, 2016, file photo. Severe weather events such as fires and floods are becoming more frequent and more difficult to predict, and it's forcing architects and engineers to rethink how they design buildings, infrastructure and cities. THE CANADIAN PRESS/Jonathan Hayward, File

FILE – Burned out houses are shown in the Abasands neighbourhood during a media tour of the fire-damaged city of Fort McMurray, Alta., in a May 9, 2016, file photo. Severe weather events such as fires and floods are becoming more frequent and more difficult to predict, and it’s forcing architects and engineers to rethink how they design buildings, infrastructure and cities. THE CANADIAN PRESS/Jonathan Hayward, File

“The main losses drivers were powerful earthquakes in Japan and Ecuador, storms in Europe and the U.S., and forest fires in Canada,” Munich Re said in a press release.

Toronto-based Catastrophe Indices and Quantification Inc. (CatIQ) has estimated insured losses from the Fort McMurray wildfire at $3.58 billion, while Property Claim Services estimated last month the fire would cost the Canadian insurance industry about $4.6 billion.

The world’s largest reinsurer reported that natural catastrophes in the United States caused almost a quarter of worldwide economic losses, accounting for 58% of global insured losses. U.S. economic losses caused by nat cats in the first half of 2016 were US$17 billion (previous year US$12 billion), of which US$11 billion (previous year US$8 billion) were insured. Approximately US$12.3 billion (US$8.8 billion insured) of this was due to a series of storms in Texas and neighbouring states, including destructive hailstorms in Dallas and San Antonio, and severe flooding in the Houston metropolitan area, Munich Re said in the release.

“Homes and businesses incur the brunt of these losses, and property damage from this spring’s thunderstorm season remind us that a roof is a building’s first line of defense against hail and wind events,” said Tony Kuczinski, president and CEO of Munich Reinsurance America, Inc., in the release. “Proper roof maintenance, roofing materials and installation are all critical to helping reduce these types of losses.” [click image to enlarge:]

Munich Re NatCat-2016 first half

Weather extremes in Texas and other southern states are symptomatic of an El Niño phase, which can cause an increase in severe storms in the region, Munich Re said in the release. Further north, El Niño conditions also caused warm and dry conditions in Alaska and western Canada, helping to trigger the worst wildfire in Canadian history.

“The fading El Niño again showed its teeth with forest fires in Canada caused by the dry conditions and heat, and a series of storms in Texas, bringing billion-dollar losses,” said Peter Höppe, head of Munich Re’s Geo Risks Research Unit. “The complete absence of tropical cyclones in the northwestern Pacific in the first half of the year is also likely to have been influenced by El Niño.”

Other highlights for the first half of 2016 include:

  • Overall global losses were above the inflation-adjusted average for the last 30 years (US$ 63 billion), but below the average for the last 10 years (US$92 billion);
  • Insured losses were in line with the inflation-adjusted average for the last 10 years and above the average for the last 30 years (US$15 billion);
  • 3,800 people lost their lives, significantly fewer than the previous year (21,000) and the averages for the last 10 and 30 years (47,000/28,000);
  • The highest losses were caused by two earthquakes (magnitudes 6.2 and 7) on the Japanese island of Kyushu in April (US$25 billion, of which US$6 billion was insured). “Countless” buildings were destroyed and 69 people were killed;
  • The greatest number of fatalities was caused by a magnitude 7.8 earthquake which hit the pacific coast of Ecuador at almost the same time the quakes hit Japan. Nearly 700 people were killed, and only US$400 million of the overall loss of US$2.5 billion was insured; and
  • The overall loss from storms in Europe totalled US$6.1 billion, of which US$3 billion was insured. Losses in Germany accounted for US$2.8 billion of overall losses and US$1.3 billion of insured losses.