Global disasters cost insurers $85 billion in 2018: Swiss RePosted On: Apr. 10, 2019 11:13 AM CST
Global insured losses from disaster events last year totaled $85 billion, Swiss Re Ltd. said Wednesday, the fourth-highest recorded in a single year.
But for 2017 and 2018 combined, the impact of global insured losses from natural catastrophes reached $219 billion, a record high over a two-year period, according to the Swiss Re Institute’s sigma report.
“The catastrophe loss experience of the last two years is a wake-up call for the insurance industry,” Swiss Re said in a statement.
More than half of the damage was caused by so-called secondary perils, which include small to midsize events like drought and wildfire outbreaks and torrential rainfall, or secondary effects of a primary peril such as storm surges or tsunami, Swiss Re said.
There has been a trend of rising losses from secondary and secondary-effect perils, the Swiss Re Institute said in the report, adding: “We expect this trend to continue given ongoing urbanization, growth in concentration of assets in exposed areas, and long-term climate change projections.”
The report also found that total global economic losses from natural catastrophes and man-made disasters reached $165 billion in 2018, less than half the $350 billion recorded the prior year and below the inflation-adjusted average of $220 billion of the previous 10 years.
“Last year’s lower losses reflect the absence of a very large event occurrence,” the Swiss Re Institute said in the report.
Of last year’s insured losses, some $76 billion were due to natural catastrophes, while man-made disasters accounted for close to $9 billion of insured losses, up from $7 billion in 2017.
The single costliest insured loss event of 2018 was the Camp Fire in Northern California, a “secondary peril” that resulted in $12 billion in losses, Swiss Re said.
Other “significant” secondary events of the year included a hailstorm in Sydney, Australia, in December, and flooding across the Carolinas in the U.S. in the aftermath of Hurricane Florence in September, Swiss Re said in the statement.
The Camp Fire was also the deadliest and most destructive single fire event in California’s history, killing 86 people and burning more than 18,000 structures, the report said.
More than 13,500 people died or went missing in disaster events in 2018, the report said, one of the lowest totals in a single year, according to sigma records. Globally, natural catastrophes claimed more than 9,800 victims in 2018. Man-made disasters, including major fires, explosions and terrorism, resulted in roughly 3,600 deaths, up from around 3,000 in 2017.
The Swiss Re Institute said it expects secondary perils will more and more rank among the top loss-making events in a year, adding “this means re/insurers need to develop enhanced methods of risk measuring, monitoring and modeling to manage a different kind of natural perils result volatility one that is more frequency than severity driven.”