Global Flood Events Rack Up $5B in Economic Costs in June: Aon Report

July 8, 2016

Major floods across the globe during June – topped by events in China and the U.S. – are expected to bring economic costs in excess of US$5.0 billion, according to Impact Forecasting, Aon Benfield’s catastrophe model development team.

Seasonal “Mei-Yu” monsoon rains led to multiple rounds of significant flooding across central and southern China throughout the month, killing more than 130 people, according to Impact Forecasting’s monthly Global Catastrophe Recap report.

The report reveals that the most damaging floods occurred in the Yangtze River basin, resulting in damage to more than 200,000 homes and total aggregated economic losses of over CNY29 billion (US$4.4 billion), according to China’s Ministry of Civil Affairs. Given low penetration levels, insurance losses are expected to be relatively low.

Elsewhere, exceptional rainfall in the U.S. state of West Virginia led to catastrophic flooding in several counties, which affected up to 5,500 homes and 125 businesses, the report said, noting that a disaster was declared by the federal government after major damage occurred in the counties of Clay, Fayette, Greenbrier, Kanawha, Monroe, Nicholas, Roane and Summers.

Total economic losses were estimated in the hundreds of millions of U.S. dollars, while insured losses are likely to be mitigated by property coverage provided by the U.S. government’s National Flood Insurance Program (NFIP), the report continued.

“It should be noted that the month featured the lowest number of June U.S. tornadoes since 1988,” the report said.

“With the continued expectation of a transition towards La Niña in the second half of 2016, the month of June provided a potential precursor to some of the global impacts typically experienced during such an ENSO phase,” said Adam Podlaha, global head of Impact Forecasting.

“The enhanced seasonal monsoon rainfall across China and elsewhere in Asia was amplified as flooding caused considerable property and agricultural damage. With catastrophe models becoming more prevalent in Asia-Pacific, the insurance industry is better able to provide a clearer understanding of the financial risks that the flood peril increasingly poses,” he said.

Impact Forecasting listed additional natural peril events that occurred worldwide in June:

  • Major flood events in India, Indonesia, Myanmar, and Ghana.
  • Several outbreaks of U.S. thunderstorms which caused damage from the Rockies to the mid-Atlantic. Aggregated economic losses were forecast at above US$500 million, while insured losses were estimated to be above $350 million.
  • Powerful thunderstorms in the Netherlands caused total economic losses of above EUR520 million ($578 million), with most of the damage sustained by farmers. The Association of Insurers reported filed agricultural claims totaling EUR130 million ($144 million).
  • An east coast low struck eastern Australia, killing at least four people. The Insurance Council of Australia (ICA) declared an insurance catastrophe as at least 32,000 claims were filed with payouts exceeding A$235 million (US$175 million). Overall economic losses were even higher.
  • Multiple rounds of severe storms caused damage in the Canadian prairies.
  • The Erskine fire in California, which damaged or destroyed at least 298 homes and structures. Total economic losses were expected to exceed $100 million.
  • Tropical Storm Colin became the earliest third named storm to develop on record in the Atlantic Ocean basin when it formed on June 5. It made landfall in Florida, but caused minimal damage in the state.

The full Impact Forecasting June 2016 Global Catastrophe Recap report, can be obtained via the Aon Benfield website.

Source: Impact Forecasting/Aon Benfield

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