21 July 2016 Insurance

Insurers hit by a third of cat losses total in Q2 2016: Aon

There were at least six separate billion-dollar global insured catastrophes, five of which were weather-related, throughout the first half of the year, where insurers were liable for 30 percent of the loss total, Aon Benfield reports.

Aon’s catastrophe model development team, Impact Forecasting, has published its latest report ‘Global Catastrophe Recap: First Half of 2016’. It analyses the affect of the natural disasters that have occurred worldwide in the first six months of the year.

For the first half of this year, initial global economic losses equated to $98 billion and global insured losses of $30 billion, which is their highest levels since 2011, but still slightly under their 10-year averages of $112 billion and $31 billion, respectively.

However, the losses were slightly above the longer-term averages of $84 billion and $24 billion dating back to 2000.

The percentage of worldwide economic losses covered by public and private insurers was 30 percent, slightly exceeding the 10-year average of 28 percent, due to the globally spreading of US losses where insurance penetration is higher.

The US accounted for 47 percent of global insurance losses endured by public and private insurance entities within the period being reviewed.

From an economic loss perspective, earthquakes were the costliest disaster type during that period ($34 billion), meaning it reached 30 percent of the loss total, mainly attributable to two powerful earthquakes that hit Japan’s Kumamoto area on April 14 and 16.

From an insurance point of view, severe convective storm (SCS) was the most excessive loss of $12.3 billion, which made up 42 percent of the loss total. The most insurable losses from SCS was caused by major thunderstorm events in the US that resulted in widespread hail, damaging straight-line winds and tornadoes. The state of Texas alone recorded approximately 55 percent of all insured SCS losses.

“The first half of 2016 ended up as the costliest on an economic and insured loss basis, since 2011. The year has already been highlighted by a significant earthquake sequence in Japan, the Fort McMurray wildfire in Canada, flooding in Western Europe and a series of extensive hailstorms in the US,” said Steve Bowen, director of Impact Forecasting.

“With the pending transition to La Niña during the second half of the year, there will be a heightened focus on the risk of flooding across parts of Asia and hurricane landfall in the Atlantic Ocean basin.

“The financial toll of weather disasters during La Niña years has historically been among the costliest on record, and so we will wait to see whether this trend plays out in the coming months.”

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