July’s Droughts, Wildfires, Floods Caused Billions in Global Economic Losses: Aon

August 10, 2018

Many countries across the globe saw worsening in drought-related and wildfire conditions during July, which have led to hundreds of deaths and created a significant financial impact – particularly in the agriculture, forestry, water management and fisheries industries.

This was the assessment of Impact Forecasting, the catastrophe model development team of Aon’s Reinsurance Solutions business, which published its monthly Global Catastrophe Recap report.

Preliminary aggregated estimates of economic losses due to harvest reduction and affected forestry exceeded multiple billions of dollars, the report said.

Northern Europe has experienced one of the deepest droughts on record, contributing to combined losses in excess of US$4.0 billion, the report said, quoting various industry estimates that German farmers alone could face economic losses of €2.5 billion (US$2.9 billion).

Other severe drought events affected agriculture in Australia and Central America, and an extensive heatwave killed more than 150 people in Japan and South Korea, Aon said.

July’s Wildfires

The report discussed the losses brought by wildfires across the globe including:

  • Carr Fire. California’s Carr Fire became one of top 10 most destructive wildfires on record after being ignited near Redding, killing six people, destroying roughly 1,600 structures and damaging many more. The report noted that the total economic cost from the Carr Fire estimated to exceed US$1 billion, with insurance losses also expected to approach or top that total.
  • Mendocino Complex Fire. Another fire in northern California, the Mendocino Complex Fire, destroyed 143 structures and became the largest fire in the modern record (since 1932) in California.
  • Greek wildfires. The deadliest wildfire event on record in Europe since 1900 had a devastating impact in the Mati, Eastern Attica region of Greece, killing at least 92 people. The fire, and others in Attica, destroyed at least 905 structures and damaged a further 740.
  • Sweden Wildfires. Sweden battled the most significant wildfire outbreak in its modern history, with damage exceeding US$100 million.

“The month of July was marked by record-breaking heat, deepening droughts, and destructive wildfires in areas all around the globe,” said Michal Lorinc, an analyst within Impact Forecasting’s Catastrophe Insight team.

“Nearly every major continent recorded some type of peril impact that will lead to a major cost to agricultural interests,” he added.

“In Northern Europe alone, the cost to local farming interests is expected to result in a multi-billion dollar loss in harvest output,” Lorinc affirmed. “All eyes are on the looming possibility of an El Niño return by the end of the year, which could exacerbate these types of impacts.”

The report discussed other natural disasters during the month, including:

  • Historic rainfall in Japan caused significant flash flooding and mudslides, leaving at least 230 people dead or missing. Nearly 50,000 homes were damaged or destroyed, with the General Insurance Association of Japan reporting 48,000 insurance claims being paid, at a preliminary cost of US$711 million.
  • Notable flooding occurred in Arizona and U.S. Northeast, Nigeria, Russia’s Far East, India and multiple countries in Southeastern Asia, including Myanmar, Vietnam, Laos, Cambodia and Philippines. Seasonal flooding in China prompted aggregated economic losses nearing US$1 billion.
  • Multiple typhoons in the Western Pacific Ocean Basin left notable damage in parts of China, Vietnam, and Japan. The costliest was Typhoon Maria, which caused nearly US$500 million in economic damage in China. Other storms that tracked across Southeast Asia were Sonh-Tinh, Ampil, and Jongdari.
  • Several outbreaks of severe weather led to widespread damage across parts of the U.S., Canada, France, Germany, Italy, and China during July.
  • Major earthquakes caused severe damage and injuries in Iran (July 22) and Indonesia (July 28).

Source: Impact Forecasting/Aon’s Reinsurance Solutions


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