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High April insured catastrophe losses led by $2bn+ Japan quakes: Aon


April 2016 saw the highest level of global natural catastrophe and severe weather losses for that month in five years, according to insurance and reinsurance broker Aon, with over $2 billion of insurance industry losses from the Japan earthquakes and $3 billion from a spate U.S. severe convective weather outbreaks.

April’s toll takes the all important U.S. insurance industry losses from natural catastrophe and severe weather events to $7.4 billion for the first four months of the year, with $6.17 billion from severe convective storms (so thunderstorm, tornadoes, damaging winds and hail) alone, as we wrote recently here.

Kumamoto earthquake images, from Koji Ueda/AP via BBCApril’s insured catastrophe loss experience around the globe was led by the Japan earthquakes, which caused massive devastation, resulting in physical damage to residential and commercial structures, vehicles and infrastructure, and business interruption losses.

The April monthly catastrophe recap report from reinsurance broker Aon Benfield’s risk analytics unit Impact Forecasting provides an estimate for the insured losses from the Japanese earthquakes that struck the Kumamoto region, Kysuhu Island of the country in early April.

Impact Forecasting said that the economic losses from the Japanese quakes are expected to pass $10 billion, while the insurance industry loss is expected to exceed $2 billion. That estimate of insurance and likely some reinsurance industry losses is aligned with other estimates which have suggested somewhere around $2 billion to be the right range.

Meanwhile the severe convective weather in the United States, including severe hail events in Texas, is estimated to have caused economic damages of over $4 billion and an insurance industry loss of over $4 billion.

The magnitude-7.8 Ecuador earthquake April, is estimated to have caused an economic loss of above $3 billion, but insurance industry impact is expected to be minimal given the much lower insurance penetration rate in the country.

Steve Bowen, Director at Impact Forecasting, commented on April’s catastrophe loads; “The global footprint of natural disaster losses in April was significant. Between major events such as the Kumamoto earthquake, the severe convective storms and flooding in the United States, and flooded agriculture in Argentina, economic and insured losses are poised to make this the costliest April since 2011.

“The large differential between the economic and insured losses is yet another reminder of how much opportunity exists for the insurance industry to help engage with governments, communities and businesses around the world to provide the risk expertise that can help mitigate the effects of natural disasters.”

Year-to-date globally we Impact Forecasting’s numbers show $45.68 billion of economic losses from natural disasters and weather catastrophes, with $11.25 billion of the losses covered by insurance.

So despite the particularly active April, the year as a whole remains within expectations, as far as insured losses go. But given the uptick in recent weeks and with other events such as the Fort McMurray wildfire in Canada suggesting further billion dollar plus insured events, it will be interesting to see how the reinsurance and ILS markets react if that uptick in event frequency continues.

PCS also noted yesterday that first-quarter 2016 catastrophe frequency and insured loss severity in the U.S. has been the highest seen in a decade.

Other events of note during the month of April 2016 include:

  • Excessive rains led to considerable flooding across Argentina, with the provinces of Entre Rios, Corrientes, Santa Fe, Chaco, Formosa, and Santiago del Estero and Uruguay sustaining the worst damage. Total economic losses to agriculture alone were estimated at ARS18.6 billion (USD1.3 billion).
  • A prodigious U.S. rainfall event caused major flash flooding in the greater Houston metro region, resulting in total economic losses expected to exceed USD1.0 billion.
  • Major flood events were recorded in Chile, China, Ecuador, Uruguay, Haiti, Russia, Saudi Arabia, Yemen, Oman, Uganda, Angola, Somalia, Ethiopia, India, and Afghanistan.
  • The combination of heavy rainfall from two tropical disturbances and Tropical Cyclone Zena led to flooding across several islands of the Fiji archipelago, killing two people.
  • An unseasonably intense heatwave killed at least 300 people in India, with the states of Telangana and Andhra Pradesh noting temperatures above 44°C (111°F).

Also read:

2016 U.S. severe weather & flood insured losses reach $7.4bn: Aon.

Japan quake loss “manageable” conservative reinsurance to help: A.M. Best.

Economic losses from Japan earthquake up to $3.5 billion: RMS.

Japan earthquake insured losses up to $2.9 billion – AIR.

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