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Catastrophes cause $30 billion in insured losses in 2016 first half

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Global natural disasters racked up $30 billion in insured losses for the first half of the year, down 3% from the 10-year average of $31 billion but up 27% from the 16-year average of $24 billion, Aon Benfield Group Ltd. said Wednesday in a report.

The Global Catastrophe Recap found that the combined Kumamoto earthquake foreshock and the main shock in Japan in April was the costliest event during the first six months of 2016, with total insured losses — including physical damage and business interruption — expected to exceed $5 billion.

Other major insured loss events include the late May and early June flooding and severe weather in Europe at $3.4 billion; the Fort McMurray wildfire in Canada at $3.2 billion; and the April 10-15 severe convective storm outbreak in the central U.S., also at $3.2 billion.

All the estimates are subject to revision as losses are further developed, Aon Benfield said in a statement.

Severe convective storms were the costliest peril for insured losses, making up 42% of the loss total. Most of the insurable losses were attributed to major thunderstorms that prompted widespread hail, damaging straight-line winds and tornadoes in the U.S. Texas alone recorded about 55% of all insured SCS losses.

The U.S. accounted for nearly half of the insured losses during the opening half of 2016, representing 47% of global losses sustained by public and private insurance entities. A series of severe weather outbreaks across central and eastern sections of the country led the way for losses with the state Texas suffering significant damage. Major metropolitan areas such as Dallas-Fort Worth and San Antonio sustained the brunt of severe convective storms.

The Asia-Pacific region was second, with 23% of insured losses, and the Europe, Middle East and Africa region was third with 16%. North, Central and South America, absent the U.S. had 14%.

Worldwide, there were at least six individual billion-dollar insured events during the first half of the year, five of which were weather-related. In addition to the Kumamoto earthquake, the Canadian wildfires, Storm Elvira in Europe and Texas wildfires also reported significant losses exceeding $3 billion each.

Economic losses totaled an estimated $98 billion, down 3% from the 10-year average and up 27% from the 16-year average, Aon Benfield said. The costliest natural disaster during the first half of the year was the earthquakes that struck Japan. Additional significant events include major flooding along the Yangtze River basin in China, severe flooding in France and Germany, and the fires in Fort McMurray.

The report also warned that more bad news might be on the way.

“It is worth noting that the third quarter has historically been the costliest for the insurance industry, which is typically driven by the peak of the Atlantic hurricane season,” the report said. “With the likely transition from El Nino to La Nina during the second half of 2016, there is a chance that hurricane frequency could be higher than seen in recent years.”

The company's 2015 Annual Global Climate and Catastrophe Report found that catastrophe losses both on an insured and economic basis have been historically much higher during La Nina years than El Nino years, going back to 1980.