2016 loss estimates highlight protection gap especially for earthquakes
Total economic losses from natural catastrophes and man-made disasters are estimated to be $158 billion in 2016, significantly higher than the $94 billion of losses such events caused in 2015, but insured losses were only around a third of this, according to Swiss Re’s latest sigma report.
Insured losses were around $49 billion, the report said, also higher than the $37 billion the previous year. Swiss Re said the gap between total losses and insured losses in 2016 illustrates that many events took place in areas where insurance coverage was low.
Natural catastrophes accounted for $150 billion of the total economic losses in 2016. Insured losses from natural catastrophe events were $42 billion in 2016, up from $28 billion in 2015, but slightly below the annual average of the previous 10 years ($46 billion).
The report also highlighted the fact that the world seems underinsured against earthquakes. There were a number of major earthquakes across the world in 2016 in places including Taiwan, Japan, Ecuador, Italy and New Zealand yet in several instances insured losses were very low.
"Society is underinsured against earthquake risk," said Kurt Karl Swiss Re’s chief economist. "And the protection gap is a global concern. For example, Italy is the 8th largest economy in the world, yet only 1 percent 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."
