According to Aon Reinsurance Solutions catastrophe risk modelling center of excellent Impact Forecasting, first-half 2018 insurance industry losses from natural catastrophe events are estimated at $21 billion, almost half the $45 billion economic impact of the same events.
Aon’s figures, of $21 billion insured disaster losses and $45 billion economic disaster losses in H1 2018, are quite a bit higher than reinsurer Munich Re’s estimates of $17 billion insured loss and $33 billion economic, which was released earlier this month.
Aon’s figures come in well below the averages, with economic losses some 64% lower than the 10-year average of $124 billion, and 48% lower than the 18-year average of $87 billion, while, the insured loss estimate is 40% lower than the 10-year average of $35 billion and 19% lower than the 18-year average of $26 billion.
Aon notes that these figures remain preliminary and are expected to develop as loss totals become clearer.
The report from Aon, its Global Catastrophe Recap: First Half of 2018, shows that natural disasters claimed more than 2,153 lives during the first half of 2018, which is the lowest figure for lives lost since 1986.
This is much lower than the long-term (1980-2017) average of 36,570 and also lower than a median of the same period (7,991).
Aon’s research found that flooding was the deadliest peril during the first-half of 2018, and was responsible for at least 892 deaths.
156 natural disaster events were counted in H1 2018, above the 18-year average of 142. No single event led to economic losses of more than $10 billion, but there were at least 15 separate billion-dollar events in the first-half, all of which were weather-related except for a single earthquake event, with 6 in the U.S., 4 in EMEA, 4 in APAC, and 1 in the Americas.
Steve Bowen, Impact Forecasting director and meteorologist, commented on the data, “The first six months of 2018 featured several large-scale disasters with at least 15 individual billion-dollar economic loss events around the world. However, the resultant losses were largely manageable for the re/insurance industry. While first half losses were lower than average, it is imperative to reiterate that this does not automatically correlate to a quieter second half.
“As last year proved on multiple occasions, even one singular event can completely change the trajectory of a year from a humanitarian and financial cost perspective. Identifying and understanding your individual level of risk remains an important asset in helping to mitigate potential impacts given the prospect of future events.”
Insured losses were actually elevated in the EMEA and Americas regions, compared to their respective mean and median during the last 18 years, EMEA due to the European windstorm season and the Americas due to winter storms and severe weather in Canada.
But Asia Pacific and the United States both saw lower insured losses than their averages, mainly due to a less active severe convective weather season in the U.S. and a quieter start to the seasonal monsoon floods in certain parts of Asia.
Global weather made up the bulk of the losses, both economic and insured, driving $43 billion of the economic tally and $20 billion of the insured.
The insurance and reinsurance losses from global weather events were still down 26% from the 10-year average of $27 billion but only 5 percent below the 18-year average of $21 billion.
In a departure from the last two years, global insured losses from severe convective storms, so payouts caused by tornado, hail, damaging wind or flash flooding, were the lowest since 2015 during the first-half of this year.
This can be put down to the slower start to the severe thunderstorm season in the United States, although activity did pick up in June as was seen with the major hail losses in Colorado and Texas.
European Windstorm Friederike was the most costly single insured loss event during the first-half, which together with other storms such as Eleanor (Burglind) meant that industry losses from the European windstorm season were among the highest this century, Aon said.
Severe winter weather was the other notable outlier, with losses in the first-half from winter weather events becoming the second-costliest of any year since 2000 for insurers and reinsurers, although largely driven by expensive events in the U.S.
With ILS investors now providing a significant share of global insurer and reinsurer risk capital, it is safe to assume that ILS funds sector and collateralised reinsurance vehicles took a reasonable share of all the larger events during the first-half.