According to Impact Forecasting, the catastrophe modelling development center of reinsurance broker Aon Benfield, insurers will be on the hook for an estimated $7 billion of losses from catastrophes and weather disasters in Q1 2014.
Impact Forecasting said in its March catastrophe report that so far in 2014 the global economy has suffered almost $20 billion of economic losses from natural hazards and that of that total the insurance industry will be responsible for paying out $7 billion in claims.
Steve Bowen, associate director and meteorologist at Impact Forecasting, said; “Despite the nearly 70 natural disaster events experienced globally during the first quarter of 2014, the financial losses attributed to these events were largely negligible to economies and insurers. The preliminary tallies of nearly USD20 billion in economic damages and USD7.0 billion in insured losses were both close to the level of losses sustained in 2012 and 2013, but well below those seen in 2010 and 2011. However, while this year’s first quarter losses were manageable for insurers, it is worth remembering that the second and third quarters are historically the costliest for the industry as severe thunderstorms, floods, droughts, and tropical cyclone activity become more prevalent.”
The severe winter weather in the United States alone is expected to see an economic loss tally of around $5.7 billion, with at least $2.6 billion of insured losses, however that runs from 2013 into the first-quarter of 2014. The European windstorm season is expected to add over $4 billion of insured losses, but again that is from the last quarter of 2013 as well.
These are relatively low insured loss totals and won’t adversely affect the reinsurance industry, especially when the sector is so awash with capital at the moment. It will take a much greater escalation of losses through the rest of 2014 for there to be any severe impact to reinsurers balance sheets or for rates in any affected regions to reverse the current softening trend.
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