catastrophe

It’s been questioned whether the insurance and reinsurance sector is ready for a significant tail event that could cause losses of $150 billion or more, or if the industry is too focused on being ready for the next Katrina.

The recent spate of natural catastrophes and severe weather events in Australia are set to cost the insurance and perhaps reinsurance industry over AUD $515 million (USD $355m+), according to the Insurance Council of Australia.

2015’s catastrophe, natural disaster and severe weather events around the globe resulted in insurance and reinsurance industry losses of $35 billion, which is 31% below the 15 year average of $51 billion and the lowest annual insured loss since 2009.

The significant winter storm events in the UK and U.S. have contributed to one of the largest single month catastrophe insurance and reinsurance loss bills in recent times, with December set to see an insurance bill of at least $4 billion.

Losses from natural catastrophes in 2015 resulted in just $27 billion of impact to the insurance and reinsurance industry, according to Munich Re, lower than the figure seen in 2014 and the lowest since 2009.

The Philippines has secured a new catastrophe contingent line of credit, to support its management of the risks posed by natural disasters, with a $500 million Second Disaster Risk Management Development Policy Loan with a Catastrophe-Deferred Drawdown Option (CAT-DDO 2).

The port of Tianjin, China storage facility explosions is set to lead the way in 2015 as the largest single catastrophe or man-made disaster insurance industry loss, but the total for the year is set to come in well below average, at an estimated $32 billion, 48% below the long-term average.

To further expand and develop the overall insurance-linked securities (ILS) pie the market needs to add greater transactional efficiency, and also access more original risk, according to Tom Johansmeyer, assistant vice president, Reinsurance Services, ISO.

Despite an expected overall RoE of roughly 13% for non-life reinsurers at year’s end 2015, a challenging investment landscape, any return to normalised catastrophe losses and declining reserve releases signal further challenges for the sector, according to reinsurance giant Swiss Re.

Global catastrophe events during October are expected to incur economic losses of more than $10 billion, as historic flooding inundated South Carolina, typhoons impacted Asia and the record-breaking hurricane Patricia made landfall in Mexico, according to Aon Benfield.