Catastrophe losses hit $44 billion in first half

Catastrophe losses hit $44 billion in first half | Insurance Business

Catastrophe losses hit $44 billion in first half

Global economic losses from catastrophes hit $44 billion in the first half of 2019, according to estimates from the Swiss Re Institute.

That’s well below $109 billion, the average first-half economic losses over the previous 10 years. It’s also down from the $51 billion in economic losses reported for the same period in 2018.

Of the total global economic losses for the first half of the year, $19 billion were covered by insurance, according to Swiss Re Institute. The main drivers for insurance losses were thunderstorms and flooding. More than 5,000 people were killed or reported missing in disaster events during the first half of the year.

Natural catastrophes accounted for $40 billion of the total global economic losses, down from $45 billion in the first half of 2018. The remaining $4 billion in losses were caused by man-made disasters. Global insured losses from natural catastrophes were $15 billion, down from $21 billion in the first half of 2018. Losses from man-made disasters decreased from $5 billion in H1 2018 to $4 billion in H1 2019.

Only about 42% of global economic losses were insured, according to Swiss Re – down from 52% in H1 2018 – because several large-scale disasters, such as Cyclone Idai in southern Africa and Cyclone Fani in India, occurred in areas with low insurance penetration. Cyclone Idai claimed more than 1,000 victims, making it the deadliest natural disaster of the year so far, Swiss Re Institute said. Economic losses from the cyclone are estimated to be at least $2 billion, of which only about 7% was insured.

“The experience of the first half of this year has once again exposed the existing protection-gap issues in emerging countries,” said Martin Bertogg, head of catastrophe perils at Swiss Re. “For example, Cyclone Idai showed just how fragile African coastal communities are. And in India, Cyclone Fani inflicted widespread damage and large insured losses. Similarly, the nature and location of the events underline the theme of secondary perils taking a larger share of the overall loss burden…”

In many regions, including the US, Canada, Europe, Australia, China and Iran, secondary perils like thunderstorms, snowmelt and torrential rains caused the highest losses through wind and water damage, Swiss Re Institute said. The institute estimated the total economic losses of these events at $32 billion. About $13 billion of these losses were insured.

Several parts of the world also experienced heatwaves and dry weather conditions in the first half, with temperatures setting new records in several locations. The full impact of the extreme summer weather has not been determined, according to Swiss Re Institute.

“Intense heatwaves and dry spells of the like we’ve seen over the last few years are expected to become more frequent, exacerbating the conditions conducive to wildfires and agriculture losses,” Bertogg said. “We also expect more variable rain patterns as rising temperatures load the atmosphere with more vapor. Society will need to adapt and prepare for these increasing occurrences.”