Insurers paid out around $50 billion for natural disaster claims last year, almost double 2015’s payout of $27 billion, reinsurer Munich Re said in its annual natural catastrophe review on Wednesday.
Earthquakes in Japan and devastating floods in China – only 2 percent of whose losses were insured – were the most expensive natural catastrophes of 2016. But the year saw the second-fewest fatalities from natural disasters in 30 years.
Some $125 billion of losses were uninsured.
It was the costliest 12 months for natural catastrophe damage after three years of relatively low losses, and above the 10-year average of $45.1 billion.
“Losses in a single year are obviously random and cannot be seen as a trend,” said board member Torsten Jeworrek. “The high percentage of uninsured losses, especially in emerging markets and developing countries, remains a concern.”
Reinsurers act as a financial backstop to insurance companies, paying a chunk of the big claims for storms or earthquakes in exchange for part of the premium.
Lower claims payouts boost insurance industry profit but have a downside for reinsurers, whose insurance company clients often then demand lower prices for reinsurers’ backing.
Two earthquakes on the southern Japanese island of Kyushu in April caused overall losses of $31 billion, while floods in China in June and July caused losses of $20 billion.
“There are now many indications that certain events – such as persistent weather systems or storms bringing torrential rain and hail – are more likely to occur in certain regions as a result of climate change,” said Peter Hoeppe, head of Munich Re’s Geo Risks Research Unit.
North America was hit by more natural disasters than in any year since 1980, with overall losses totalling $10.2 billion and Hurricane Matthew the most serious event. Its greatest impact was in Haiti, where it killed around 550 people.
The climate phenomenon known as “El Niño” had in 2015 helped reduce the development of hurricanes in the North Atlantic, which traditionally cause some of the heaviest claims for the insurance industry.
Globally, 8,700 people were killed by natural disasters in 2016, far fewer than the 25,400 fatalities in 2015 and the 10-year average of 60,600.
The review gave no claims figures for Munich Re itself. The reinsurer is due to report 2015 results on Feb. 7.
(Reporting by Georgina Prodhan and Maria Sheahan; editing by Harro ten Wolde and Alexandra Hudson)