Natural disaster losses around the globe paid for by the insurance and reinsurance industry during the first-half of 2018 came in at just $17 billion, which is down one-third from the prior year but aligned with the long-term average, according to global reinsurer Munich Re.
The $17 billion of insured natural catastrophe losses in H1 2018 is just slightly below the long-term 30 year average of $17.5 billion and 33% down on the $25.5 billion recorded in H1 2017.
Global economic losses from natural catastrophes for H1 2018 came in at $33 billion, which was less than half the long-term average of $68.3 billion and roughly half of H1 2017’s $65 billion economic loss tally.
Munich Re noted that there were “significantly lower losses than usual” during the first-half of 2018, as economic losses came out at the lowest level since 2005.
Torsten Jeworrek, a member of the Munich Re board, commented, “Following a period of extreme disasters with record losses, it is nice to be able to record a phase with low losses. Of course, looking at a short timespan may distort the true picture. The most important thing is to understand the long-term developments. That is why we must continue to make every effort to understand the background to natural disasters, and provide safeguards against them in the form of intelligent prevention measures. This is borne out by statistics on flooding losses in Europe, which have generally decreased thanks to investment in flood protection and control.”
The number of deaths recorded was also down, but still a high overall number with some 3,000 people losing their lives due to natural disasters and severe weather in the first-half of 2018. This is much lower than the 5,540 for the corresponding period of 2017.
There were outsized losses as well, particularly weather related losses to crops in the agricultural sector as a result of drought in Europe, as well as European windstorms and winter storms which drove higher insurance and reinsurance losses as well.
The most destructive natural catastrophe event of the period was European Storm Friederike, which struck the United Kingdom, northern France, the Benelux states and Germany in mid-January.
Munich Re estimates the economic loss from windstorm Friederike at $ 2.7 billion, with $2.1 billion of the total insured, which the reinsurance firm notes is reflective of the high insurance penetration of windstorm cover in Europe.
North American winter weather also drove high insured losses, with the most destructive event a blizzard in the first week of March, causing $1.6 billion of insurance industry losses.
In total, winter losses in Europe drove $3.6 billion of insured losses, while winter weather in North America resulted in a $2.7 billion insured loss.
Severe thunderstorms in Europe are also highlighted by Munich Re, especially a period of severe weather that struck Germany and resulted in at least EUR 900 million of insured losses from rainfall, hail and flooding.
Additionally, the reinsurer highlights a blocking weather pattern that created very dry conditions in some regions and severe weather in others in Europe during the period.
Ernst Rauch, Chief Climate and Geo Scientist at Munich Re, said, “Although individual events like these cannot be attributed to climate change, climate model studies show that one future effect of the increase in temperature will be more frequent periods of heat and drought, along with more intensive convective rainfall. So these weather processes roughly fit the pattern that may be expected more frequently in future as a consequence of climate change.”
The reinsurer does not highlight the severe convective weather that struck the United States in June, but as we now know this has contributed $3 billion to the total first-half 2018 insurance and reinsurance industry loss.
Given the expansion of the ILS market and its contribution to provision of global insurer and reinsurer risk capital, it is safe to assume that the ILS fund sector and collateralised reinsurance vehicles took a share of all the larger events during the period.