Global reinsurance firm Munich Re estimates that global insured losses from natural catastrophe events reached $34 billion in the first-half of 2022, as over half of the economic loss tally was covered.
Munich Re pegs economic losses from natural disasters at $65 billion for the first-half of 2022, down on the $105 billion seen in H1 2021.
With $34 billion covered by insurance and reinsurance in H1 2022, roughly a similar figure to the prior year, it means Munich Re sees the global insurance protection gap as far smaller this year, which is likely a function of the location and types of catastrophe losses measured.
Munich Re puts the first-half insured natural disaster burden as average for this stage of the year.
Munich Re’s figures fall short of the estimate from insurance and reinsurance broker Aon, which recently said the H1 tally would be around $39 billion, which is some 18% above the average, by the broker’s measure.
But Aon also put global economic losses from natural disasters at 24% below average for H1, at $92 billion.
Which shows a divergence in how these two re/insurance industry power-houses categorise catastrophe losses, it seems, with Aon likely including much more in the way of severe weather events than Munich Re, resulting in a far higher economic loss estimate.
Differences aside, while Munich Re puts the loss burden as average for the insurance and reinsurance industry, it’s already evident in results that some firms are taking a reasonable impact to their financial performance from the first-half catastrophe loss activity.
Torsten Jeworrek, Member of the Board of Management at Munich Re, commented on first-half loss activity, “The natural disaster picture for the first half of 2022 is dominated by weather-related catastrophes. Extreme tornadoes in the US caused billions in damage, parts of eastern coastal Australia were submerged by floods, and southern Europe struggled with extreme heat, wildfires and drought. The recently published IPCC report warned of the need for insurers to adapt their loss models to adequately assess the changing risk. Loss prevention is a fundamental component in mitigating the economic effects of climate change. It is therefore extremely worrying that insurance penetration in developing and emerging nations is stagnating at well below 10%, and that even in industrial countries there is much room for improvement.”
Munich Re puts the Australia flood losses from February at an industry loss estimate of $3.7 billion, while the March 2022 Japanese quake is estimated at $2.8 billion. APAC contributed $8 billion of the insured losses for H1.
The US dominated insured losses though, with nearly two-thirds coming from the country, at $19 billion.
In fact, just for the first-half of the year, Munich Re estimates that US severe thunderstorms drove $22 billion of economic losses, with some $17 billion covered by insurance and reinsurance.
European windstorms were the other major driver of losses, at $5.2 billion, while more recent heatwaves, wildfires and droughts in Europe are not estimated, but Ernst Rauch, Chief Climate Scientist at Munich Re, and head of the Climate Solutions Unit commented, “What used to be warm days will be hot days, what used to be hot days will be extremely hot days. Droughts and wildfires are a direct consequence of this.”
Europe contributed roughly $7 billion of the insured loss tally for H1.
Rauch summed up the first-half of the year’s weather catastrophes, “They may all be individual events with different causes, but taken together, one thing is becoming extremely clear: the powerful influence of climate change is becoming ever more evident! And the consequences for people across the world are becoming ever more palpable. The IPCC has made an even clearer diagnosis, stating that weather-related disasters such as heatwaves, torrential rainfall or droughts on a warmer Earth will increase in both frequency and intensity. Heatwaves will tend to last longer and bring more extreme temperatures. This will differ from region to region – in Europe it will be the south that is hit hardest.”