Natural catastrophes cost insurers $52 billion in 2019

Insurers paid claims worth $52 billion in 2019 due to damage caused by natural disasters, according to data provided by Munich Re. Global losses reach $150 billion. Only 35% of the damages were insured, a percentage similar to that recorded over the last 10 years.

Munich Re experts highlight that in 2019 there have been many losses caused by floods. This type of risk has a lower level of insurance than, for example, claims caused by strong winds in industrialized countries. It should be noted that a good part of the natural disasters registered last year took place in developing countries, in which insurance is not so widespread.

In total, the insurer’s report states that there have been 820 natural disasters between January and December 2019, a figure similar to that recorded in the last 30 years and around 9,000 people have lost their lives.

Tropical typhoons

As in 2018, Japan was again affected by very strong typhoons. Hagibis and Faxai were two equally powerful tropical cyclones that hit the Tokyo area. While Faxai swept Tokyo Bay with a speed that exceeded 170 km/h until it made landfall in the city of Chiba, Hagibis struck further northwest, directly over the Yokohama-Tokyo conurbation. A special feature of Hagibis was that it caused heavy rains and in some areas fell 1,000 liters per square meter in just two days.

These two cyclones caused the most expensive natural disasters of the year in terms of overall losses and insured losses. According to preliminary estimates, Hagibis’ total losses reached $17 billion, with insured losses of about $10 billion. Faxai caused estimated overall losses of approximately $9 billion, with insured losses of about $7 billion.

Ernst Rauch, Head of Climate at Munich Re, states that “the typhoon season shows that we need to consider natural climate variations in the short term, as well as long-term trends due to climate change.” In this regard, Rauch said that “cyclones are being associated more frequently with extreme rainfall, as has happened with Hagibis in Japan in 2019 and Hurricane Harvey in 2017 in the United States.” The expert of the European insurer considered that “recognizing these changes can form the basis of new preventive measures to reduce losses.”

The strongest hurricane of the Atlantic season, dorian, caused catastrophic damage in the Bahamas. The Category 5 hurricane hit the Abaco Islands in the north of the island state on September 1 with a wind speed of approximately 290 km/h. From there, the storm moved to the neighboring island of Grand Bahama and stopped there for a day and a half while extreme wind speeds were maintained. Buildings, infrastructure, yachts and ships were completely destroyed in many areas. Dorian caused an overall loss of about $5.6 billion, and only a small portion of these losses affected the U.S. Insured losses reached $4 billion.

Due to the absence of many powerful hurricanes, the United States’ share of global natural disaster losses was lower than usual (31% of global losses compared to the long-term average of 35%). The U.S. storm season brought a little more tornadoes than the long-term average. A strong thaw followed by a series of thunderstorms in March and May led to severe flooding in the Midwest and other areas along the Mississippi. Overall losses from these events were approximately $24 billion, with approximately $14 billion in insured losses.

Wildfires: Mild Relief in California, Huge Fires in Australia

After record losses from previous years, California’s wildfire season was less intense. A wet winter improved summer drought conditions compared to recent summers. There were still many fires, but they burned an area much smaller than the average of the last five years. Several fires threatened cities and millions of people had no electricity for days as power was cut off as a precaution. Overall losses were $1.1 billion, of which about $800 million were insured.

Australia’s bushfire season has been devastating. High temperatures and dry air, in combination with a large amount of flammable fuel due to the lack of rainfall during the colder season, led to a very early start to the wildfire season.

In September there was a big fire in Queensland and then there were extreme fires in New South Wales, Victoria, South Australia, Western Australia and Tasmania, reaching to engulf Sydney in smoke. Schools and government offices were temporarily closed. Losses from the fires were substantial, although the flames did not reach Sydney. However, the wildfire season is expected to continue during the months of January and February in the middle of summer.

800 million insured losses in Europe

A combination of heat waves and hailstorms were the biggest cause of losses in Europe. A long dry period led to crop failures in many countries. In the Munich area, a storm in June caused hail the size of golf balls, causing losses of almost one billion euros, of which almost three-quarters were insured. There was even hail damage in the Adriatic in July. Hail as large as orange severely affected cars and roofs. Many people were injured. Overall losses from summer storms in Europe were €2.2 billion, with insured losses of approximately €800 million.

Source: The Vanguard