Aon Benfield, the reinsurance broking arm of Aon plc, said today that its Impact Forecasting catastrophe model team has determined that first-half 2015 catastrophe insured losses totaled just $15 billion, which is 47% below the ten-year average.
Both economic and insurance industry losses from catastrophes and natural disasters during the first six months of 2015 came in well below the ten-year average, Impact Forecasting said in its latest report. The bulk of the insurance industry hit came from the United States, with 73% of losses located there.
Economic losses at $46 billion were 58% below the average, while insured losses at $15 billion are 47% below the average. That compares to reinsurance firm Munich Re’s recent report that $12 billion of insured losses were 56% below the ten-year figure.
The majority of losses occurred in regions of the world where higher insurance penetration is evident, in the first half, resulting in approximately 31% of economic losses being covered, including both private insurers and government-sponsored programs.
Contrasting with the overall percentage of losses insured, Nepal’s devastating earthquake only saw 2% of losses covered by insurance, highlighting the ongoing protection gap in emerging and developing economies.
Severe thunderstorms caused the largest proportion of losses, with 33% of the economic loss and 49% of the insured loss attributable to thunderstorm risks, which includes tornadoes, hail and convective winds.
The majority of these costs were attributed to strong convective thunderstorm events which caused widespread hail, damaging straight-line winds, tornadoes, and major flash flooding in the United States during the months of April, May and June.
73% of the insured losses were sustained in the U.S., due to an active winter storm season combined with numerous spring severe convective storm and thunderstorm events. Asia Pacific was second, with 14% of the losses, while Europe, Middle East & Africa was third with 11% of the insurance industry.
There were five billion dollar or greater insured loss events in the first-half of 2015. The severe winter weather in the U.S in February, drought affecting the U.S., two spells of severe convective weather in the U.S. in April and May, and European windstorm Mike & Niklas. The severe winter weather, with an insured loss of $1.8 billion, was the top event of the first-half.
Steve Bowen, associate director and meteorologist with Aon Benfield’s Impact Forecasting team, commented; “The first half of 2015 was the quietest on an economic and insured loss basis since 2006. Despite having some well-documented disaster events in the United States, Asia Pacific and Europe, it was a largely manageable initial six months of the year for governments and the insurance industry. Looking ahead to the rest of 2015, the continued strengthening of what could be the strongest El Nino in nearly two-decades is poised to have far-reaching impacts around the globe. How that translates to disaster losses remains to be seen, but something to keep a close eye on in the coming months.”
Once again catastrophe losses provide no solace for reinsurers or those hoping for the pressure on catastrophe exposed insurance and reinsurance pricing to be relieved. While industry losses remain so far below the average the impact to well-capitalised insurers and reinsurers is easily absorbed.