The United States was hit by 14 billion dollar weather and climate disasters in 2018, costing the country roughly $91 billion, according to the U.S. National Oceanic and Atmospheric Administration (NOAA).
In its latest report on the state of the U.S. climate in 2018, NOAA reports that the number of weather and climate related events that caused losses greater than $1 billion and their cumulative economic cost ranked the fourth highest since its records began in 1980.
As ever, when government estimates of the true cost to the economy from weather and climate related catastrophes are released, the gap between insured losses and the overall cost is stark.
At the top of the list, in terms of economic impacts, was hurricane Michael, which NOAA estimates as having caused $25 billion of damages.
The latest insurance and reinsurance industry loss estimates point towards a $10 billion toll for the market from hurricane Michael.
Next most expensive individual loss event was hurricane Florence, which NOAA says cost $24 billion.
The insurance and reinsurance industry estimates its loss from hurricane Florence was only around $5.5 billion, leaving a significant gap uninsured in this case and highlighting the differences between hurricane Michael (wind and surge driven damages) versus hurricane Florence (where rainfall and flooding drove most of the costs).
The California wildfires are bundled together for an economic cost of $24 billion by NOAA, a figure which set a new record for U.S. losses from wildfires in any year. Notably, 2018 was the second year in a row that wildfire losses reached a record level.
Most of this loss seems to be from the more recent Camp and Woolsey wildfires, which are estimated to have driven roughly a $17 billion insurance and reinsurance market loss between them. The Carr and Mendocino wildfires drove the rest of the damage in the summer of 2018.
Overall, the 14 billion dollar U.S. weather and climate events claimed at least 247 lives, NOAA said.
Of the $91 billion total economic loss, around $73 billion of this was attributable to just the two hurricanes and the California wildfires,which highlights the impactful nature of these events and so it’s unsurprising that this is where the majority of insured losses fell in 2018.
NOAA said that 2018 was the 8th consecutive year that saw at least eight billion dollar disasters striking the U.S., exceeding the long-term average of 6.2 per year. 2018 was also the 8th year that saw at least 10 billion-dollar disasters and all but one of those years have been since 2008.
Highlighting how impactful severe weather and climate is to the U.S. economy, NOAA said that across its 39 year’s of record it now counts billion dollar plus disasters as costing a huge $1.6 trillion.
Summing up the impacts of the year, lead scientist for the U.S. Billion-dollar Weather and Climate Disasters analysis Adam Smith, said, “These billion-dollar disaster events are becoming an increasingly larger percentage of the cumulative damage from the full distribution of weather-related events at all scales and loss levels.
“Clearly, the historically large U.S. losses from hurricanes and wildfires over the last few years have further skewed the total distribution of extreme weather costs.
“This increase reflects a combination of increased exposure, vulnerability and the fact the climate change is playing an increasing role in the increasing frequency in some types of extremes that lead to billion-dollar disasters.”
Food for thought for the risk industry as a whole.