The hurricane trio of Harvey, Irma and Maria will cost the global insurance industry a record amount in 2017: the final insurance bill for those and other natural catastrophes, including a severe earthquake in Mexico, is expected to come to US$ 135bn – higher than ever before. And overall losses – i.e. including uninsured losses – amounted to US$ 330bn, the second-highest figure ever recorded for natural disasters, said a Munich Re report released on Thursday.. The only costlier year so far was 2011, when the Tohoku earthquake in Japan contributed to overall losses of US$ 354bn in today’s dollars.
Torsten Jeworrek, Munich Re Board member responsible for global reinsurance business: “This year’s extreme natural catastrophes show how important insurance is in absorbing financial losses in the wake of such disasters. Munich Re is willing to develop this business further – we have the necessary capacity and expertise. For me, a key point is that some of the catastrophic events, such as the series of three extremely damaging hurricanes, or the very severe flooding in South Asia after extraordinarily heavy monsoon rains, are giving us a foretaste of what is to come. Because even though individual events cannot be directly traced to climate change, our experts expect such extreme weather to occur more often in future.”
The year’s loss figures in detail:
The overall loss figure of US$ 330bn, for all types of natural disaster, was almost double the ten-year, inflation-adjusted average of US$ 170bn. Losses from weather-related natural catastrophes set a new record. Insured losses were almost three times higher than the average of US$ 49bn. Our statistics identified a total of 710 relevant natural catastrophes, which was also significantly more than the average of 605. Approximately 10,000 people lost their lives in natural disasters this year, which is a slightly higher figure to last year’s, but at least much lower than the ten-year average of 60,000.
US losses dominate the statistics
The US share of losses in 2017 was even larger than usual: 50% as compared to the long-term average of 32%. When considering North America as a whole, the share rises to 83%.
In late August, Hurricane Harvey made landfall in Texas as a Category 4 storm. After landfall, the storm stalled over the state for several days and was able to continue to tap moisture from the very warm Gulf of Mexico. This resulted in torrential rainfall of such magnitude over the city of Houston that, based on long-term statistics, should occur less than once in a thousand years. With overall losses of around US$ 85bn, Hurricane Harvey was the costliest natural disaster of 2017.
Asia: Heavy monsoon rains cost many human lives
Some 2,700 people lost their lives following an extremely severe monsoon in South Asia. The annual monsoon season, which brings the otherwise desperately needed rain, lasted about four weeks longer than normal in 2017. The regions most severely affected this time were the Terai lowlands in Nepal, where almost half of the Nepalese live, as well as certain Indian provinces along the Himalayas. In some districts, three-quarters of the territory was under water. The fact that only a small fraction of the US$ 3.5bn in total losses was insured contributed to the humanitarian catastrophe.
Hermann Pohlchristoph, Munich Re Board member responsible for Asia-Pacific:“In the Asia-Pacific region, natural catastrophe losses were thankfully less severe than in previous years: at US$ 33bn, they were below both last year’s total of US$ 96bn and the ten-year average of US$ 85bn. At the same time, the numbers show how alarmingly sparse insurance cover still is in Asia: only 8% of losses there were insured. And yet appropriate insurance solutions do exist, which can significantly help get people and economies back on their feet financially after a natural disaster.”
Ernst Rauch, Head of Climate & Public Sector Business Development:said “The above-average share of insured losses this year masks the reality of how little coverage many parts of the world still have. In many developing countries, losses from natural catastrophes often remain almost totally uninsured. And even in highly developed countries like the US, whose share of insured losses is significantly greater, more widespread insurance coverage would still be very beneficial to the economy. Though there was in fact a slight silver lining among all the clouds: Irma and Maria meant that some Caribbean islands were hit twice in a row by severe hurricanes this year.