First half of 2016 sees a large rise in disaster related losses
- Published: Tuesday, 23 August 2016 07:24
Preliminary sigma estimates published by Swiss Re show that total economic losses from natural catastrophes and man-made disasters reached USD 71 billion in the first half of 2016. This is a 38 percent compared to the same period in 2015. The global insurance industry covered a total of USD 31 billion, or 44 percent, of the total losses: up 51 percent from the first half of 2015. Thunderstorms in the US and Europe were the costliest events for the insurance sector in the first half. Around 6,000 people lost their lives in natural catastrophes and man-made events in the first six months of the year, compared to 12,000 in the first half of 2015.
Of the total economic losses in the first half of the year, natural catastrophes made up USD 68 billion (compared with USD 46 billion in H1 2015), while the remaining USD 3 billion came from man-made disasters. Total global insured losses from natural catastrophes rose to USD 28 billion, driven by large losses from different perils, from thunderstorms to wildfires, across all regions. This is slightly above the annual average first-half loss of the previous 10 years. Insured losses from man-made disasters fell to USD 3 billion from USD 5 billion in the first half of 2015.
Three separate severe weather events in the US, including large hail, caused combined insured losses of over USD 7 billion. The most intense of these was a major convective storm in Texas in April 2016, resulting in insured losses of USD 3.1 billion, as large hailstones caused widespread property damage.
Europe was also subject to severe weather events. In late May and early June, the two slow-moving low-pressure systems Elvira and Friederike caused thunderstorms, flash floods, and river flooding, with France and Germany being worst hit. The total insured losses from these storms and floods were USD 2.8 billion.
A series of earthquakes struck the Kumamoto prefecture in Japan, including a 7.0-magnitude quake that struck during the early hours of 16 April 2016. The quakes resulted in extensive structural damage, fires, and collapsed buildings. Insured losses from the series of shocks amounted to USD 5.6 billion. There were 64 fatalities.
On the same day on the other side of the world, a 7.3-magnitude earthquake hit Ecuador. The worst-hit area was Manabí Province on the coast, where bridges and buildings collapsed. In total 668 people died in the earthquake, making it the deadliest single event in the first half of the year. Given the low insurance penetration, insured losses came to just USD 400 million.
Wildfires in Canada were another cause of large insurance losses in the first half of 2016. Dry conditions and strong winds led to the rapid spread of wildfires in Alberta, Canada. The town of Fort McMurray was evacuated, where many homes were completely destroyed. The area is the heart of Canada's oil sands production, and the overall insured losses totalled to USD 2.5 billion, making this one of the costliest wildfire events in insurance industry history.
The global insured loss total for the first half may be subject to revision. Any revision as well as the ongoing hurricane season in the North Atlantic could generate higher losses in the remainder of the year.