First Half-Year Economic, Insured Cat Losses Below Average: Impact Forecasting

July 22, 2015

In its latest report Impact Forecasting, Aon Benfield’s catastrophe model development team states: “Global natural disaster losses during the first half of 2015, from both an economic and insured loss perspective, were each below the 10-year (2005-2014) average.

“Preliminary data determined that economic losses were $46 billion, down 58 percent from the 10-year average of $107 billion, and insured losses were $15 billion, down 47 percent from the 10-year average of $28 billion.”

The report also notes that the “percentage of global economic losses that were covered by insurance (including both private insurers and government-sponsored programs) was 31 percent. This is slightly above the 10-year average of 27 percent because the majority of the losses occurred in regions with higher insurance penetration.

“By contrast, around two percent of the multi-billion-dollar economic loss from the Nepal earthquake was covered by insurance. Statistics like this show how catastrophe models can play a role in helping the insurance industry to better understand these risks and seek ways to grow insurance penetration in underserved regions.”

In total numbers the costliest disasters, however, weren’t from earthquakes, although the quake in Nepal generated the largest single event loss; they were generated by severe thunderstorms, “the costliest disaster type, comprising 33 percent of the economic loss and 49 percent of the insured loss,” the report said.

The report explained that “most of the costs were attributed to strong convective thunderstorm events that prompted widespread hail, damaging straight-line winds, tornadoes, and major flash flooding in the United States during the months of April, May and June.”

In addition, “a clear majority (73 percent) of the insured losses were sustained in the United States due to an active winter season combined with numerous spring severe convective storm events. Asia Pacific was second with 14 percent and Europe, Middle East & Africa was third with 11 percent of the insured loss.”

Steve Bowen, associate director and meteorologist with Aon Benfield’s Impact Forecasting team, said: “The first half of 2015 was the quietest on an economic and insured loss basis since 2006. Despite having some well-documented disaster events in the United States, Asia Pacific and Europe, it was a largely manageable initial six months of the year for governments and the insurance industry.

“Looking ahead to the rest of 2015, the continued strengthening of what could be the strongest El Nino in nearly two-decades is poised to have far-reaching impacts around the globe. How that translates to disaster losses remains to be seen, but something to keep a close eye on in the coming months.”

To view the full Impact Forecasting June 2015 Global Catastrophe Recap report, please follow the link: http://thoughtleadership.aonbenfield.com/Documents/20152017-if1h2015-catrecap.pdf

Source: Aon Benfield/Impact Forecasting

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