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Insured disaster losses reach $49B worldwide in 2016


Insured losses from natural and man-made disasters came to $49 billion globally in 2016, Swiss Re Ltd. said Thursday.

That is up from $37 billion last year as earthquakes struck underinsured areas, Swiss Re said in its preliminary sigma study estimates for this year.

Swiss Re said total economic losses came to $158 billion, 68% higher than 2015’s figure, caused mainly by large natural catastrophes such as earthquakes and floods, according to preliminary data.

Globally, about 10,000 people died in disasters in 2016, according to the study.

Insured losses from natural catastrophes were $42 billion in 2016, up from $28 billion in 2015, but slightly below the annual average for the previous 10 years of $46 billion. Man-made disasters triggered an additional $7 billion in insurance claims in 2016, Swiss Re said.

The gap between total losses and insured losses in 2016 shows that many events took place in areas where insurance coverage was low, Swiss Re said. This was particularly true concerning earthquakes, which hit Ecuador, Italy, Japan, New Zealand and Taiwan. 

“Society is underinsured against earthquake risk,” Swiss Re chief economist Kurt Karl said in a statement. “And the protection gap is a global concern. For example, Italy is the 8th largest economy in the world, yet only 1% of homes in Italy are insured against earthquake risk. Most of the reconstruction cost burden of this year's quakes there will fall on households and society at large.”

An earthquake struck central Italy in August, destroying some small towns and killing 299 people. There were other strong quakes in October, which added to the destruction, but with no loss of life. 

Government sources estimate that the overall reconstruction cost for the August earthquake in Italy alone will be as high as $5 billion. Insured losses for that event, however, are only a fraction of the total, estimated at $70 million, mainly from commercial assets.

One of the largest earthquakes was the 7.0-magnitude quake that struck the Kumamoto prefecture in Japan on April 16, part of a series of strong shocks and aftershocks in the region. 

The total economic cost was at least $20 billion, of which $5 billion was insured. The Kumamoto quakes were the costliest disaster event globally of the year, Swiss Re.
In October, Hurricane Matthew caused devastation across the east Caribbean and southeastern U.S. with insured losses estimated to be over $4 billion. Hurricane Matthew was the strongest of the season and the deadliest natural catastrophe of the year globally, "globally, claiming up to 733 lives, most of those lost in Haiti,” Swiss Re said.

Several large-scale flood events hit the U.S. in 2016. The biggest was in August when heavy rains caused widespread flooding in Louisiana and Mississippi. Private insured losses were at least $1 billion. 

Europe and Asia also saw heavy flooding with storms and floods leading to insured losses of $2.9 billion. In Asia, heavy rains throughout the year led to severe floods in China and other countries.

Wildfires in Canada were another cause of large insurance losses in 2016. The town of Fort McMurray, Alberta, was evacuated, and many homes there were destroyed. Insured losses were around $2.8 billion. This is one of the costliest wildfire events in insurance industry history, and it is the biggest loss the Canadian insurance sector has ever experienced, Swiss Re said.