Impact Forecasting, reinsurance broker Aon Benfield’s catastrophe model development unit, has released its report on 2013 natural catastrophe events and puts total insured catastrophe losses for 2013 at $45 billion.
The report cites 296 natural catastrophe events which between them Aon Benfield believes caused economic losses of $196 billion. This is just 4% below the 10-year average economic loss total of $200 billion, but the number of events was actually above the average of 259 events, according to Aon.
This is interesting, as the economic loss total from Impact Forecasting is significantly higher than the estimate released by the world’s largest reinsurer Munich Re last week. Munich Re’s report put total economic losses from natural catastrophes in 2013 at $125 billion, with insured losses at $31 billion, both of which numbers are significantly below the Impact Forecasting estimates.
Reinsurance firm Swiss Re also provided lower estimates than Aon Benfield when it released some early estimates in December. Swiss Re put the economic loss toll at $130 billion for both natural catastrophe and man-made disaster losses in 2013. Swiss Re said that insured losses purely from natural catastrophe events in 2013 reached at least $38 billion.
The differences may be explained by selection criteria to some degree, all three firms report on losses above a certain size and include some events that the others don’t. Despite this, the difference in the economic loss figure does seem very large. It will be interesting to see whether Swiss Re’s full report, due towards the end of Q1, will narrow that gap.
Impact Forecasting said that the $45 billion of insured natural catastrophe losses was the lowest since 2009 and 22% below the 10-year average of $58 billion.
2013 saw a reversal of typical natural catastrophe insured loss trends, with the majority of losses coming from Europe and Asia, rather than the United States. However, despite just 16% of economic losses coming from the U.S., almost 45% of insured losses still emanated from there, demonstrating the higher insurance penetration rates.
Impact Forecasting notes that flooding accounted for 35% of all global economic losses during 2013, which was their highest percentage of aggregate losses since 2010. Demonstrating that it wasn’t just a wet year though, drought continued to drive billion-dollar economic losses in Brazil, China, New Zealand, and the U.S.
Stephen Mildenhall, Chief Executive Officer of Aon Benfield Analytics, commented; “2013 was an active year for serious catastrophe events but one in which the industry dodged the bullet of a single dominating insured event. Typhoon Haiyan, however, demonstrated the real and ever-present potential for large scale destruction. U.S. insured losses, at 45 percent of the total, were in-line with the U.S. 42 percent share of global property premium.”
The May/June flooding in Central Europe became the costliest single event of the year, causing an estimated $5.3 billion insured loss and approximately $22 billion in economic losses, according to Aon Benfield. Germany was hit particularly hard in 2013, sustaining most of the flood losses as well as enduring record-level insured hail losses during multiple summer convective thunderstorm events.
Over the course of the year, Europe, the Middle East and Africa (EMEA) and the Americas (Non-U.S.) all sustained aggregate insured losses above their 10-year averages. The United States and Asia-Pacific (APAC) regions both incurred below normal insured losses.
Steve Bowen, senior scientist and meteorologist at Impact Forecasting, stated; “Despite registering nine separate billion-dollar events, natural disaster losses in the U.S. were down 78 percent from 2012. The most significant losses in 2013 were found in Europe and Asia Pacific, where each region endured multiple events that had major financial and societal implications. While not the costliest event, Super Typhoon Haiyan was the most catastrophic after coming ashore in the Philippines as one of the strongest tropical cyclones ever recorded. Typhoon activity in the Western Pacific also led to Typhoon Fitow becoming the second-costliest insured event in China’s history after payouts surpassed USD1.0 billion. An active year in Europe saw economic losses that were the highest since 2002 and 90 percent above its recent ten-year average.”
The report also shows that, based on preliminary data, 2013 was the fourth warmest year on record since global land and ocean temperature records began in 1880.
It’s interesting to look at the ratio of economic to insured losses, to give a picture of insurance penetration for property catastrophe risks. According to the Impact Forecasting figures, 67% of U.S. economic losses were insured, 17% in the Americas (non-U.S.), 35% in EMEA and just 8% in APAC.
Comparing the three reports, Aon Benfield’s Impact Forecasting, with Munich Re and Swiss Re, the Impact Forecasting figures suggest that only 23% of global economic losses from natural catastrophes were insured, the Munich Re figures say 25% were insured, while the Swiss Re figures (including man-made disasters) suggest 34% were insured.
You can access the full report from Impact Forecasting in PDF format here.
Read other recent articles reporting on 2013 catastrophe loss events:
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