Hurricane losses set new cat record in 2017: Munich Re

Heavy hurricane losses contributed to an annual insured loss record of $135bn in 2017, according to Munich Re. Its figures show that at about $68bn, Hurricanes Harvey, Irma and Maria landed the US with 50% of the total insured loss bill, up from a long-term average of 32%. Before Christmas, Swiss Re’s sigma calculated global insured catastrophe losses at $136bn, with the three hurricanes costing a combined $93bn. Munich Re said Hurricane Harvey was the costliest natural disaster of 2017 with total losses of $85bn, but explained that Hurricane Irma was the costliest insured loss of the year at $32bn. Economic losses from natural catastrophes totalled $330bn last year, the second highest total on record behind 2011 at $354bn, and double the ten-year average of $170bn, according to Munich Re. The US also recorded severe thunderstorms and tornadoes, while five hail events caused insured losses of more than $1bn each. In California, wildfires that began in October are expected to cost insurers about $8bn. Torsten Jeworrek, Munich Re board member, said: “Some of the catastrophic events, such as the series of three extremely damaging hurricanes, or the very severe flooding in south Asia after extraordinarily heavy monsoon rains, are giving us a foretaste of what is to come. Because even though individual events cannot be directly traced to climate change, our experts expect such extreme weather to occur more often in future.” Munich Re said its catastrophe report recorded 710 natural catastrophes in 2017, higher than the ten-year average of 605, while 10,000 people lost their lives. Tony Kuczinski, president and CEO of Munich Re US, said: “This hurricane season is a stark example of the incredibly important role that Munich Re plays in helping people and communities rebuild in the wake of natural catastrophes. And we learned from these events. First, that mitigation and improved risk management, such as stronger building codes in Florida, can work to reduce losses and promote life safety. “Second, there continues to be a substantial insurance gap, even in a highly-developed market like the United States where, for example, the vast majority of home and small business owners do not purchase flood insurance. Our industry’s risk expertise, capital strength and claims-handling infrastructure are critical to finding meaningful solutions, and Munich Re is an active participant in the public-private partnership that seeks to offer more flood insurance options and promote flood protection.” In Europe, late frosts caused $3.6bn of damage to crops, although insurance only picked up a bill for $650m. Munich Re said such events could become more frequent as a result of climate change. In Asia, 2,700 people died in a severe monsoon that lasted for about four weeks longer than normal, impacting Nepal in particular. Hermann Pohlchristoph, Munich Re board member for Asia-Pacific, said: “In the Asia-Pacific region, natural catastrophe losses were thankfully less severe than in previous years: at $33bn, they were below both last year’s total of $96bn and the ten-year average of $85bn.” Ernst Rauch, head of climate and public sector business development at Munich Re, said: “The above-average share of insured losses this year masks the reality of how little coverage many parts of the world still have.” “Irma and Maria meant that some Caribbean islands, such as Dominica, were hit twice in a row by severe hurricanes this year. Yet only a few days after the events, the CCRIF (Caribbean Catastrophe Risk Insurance Facility), a public-private regional insurance pool, was able to pay out about $50m in emergency funds. Munich Re supports the development of such pool solutions, which can do much to help close the gaps in cover that exist in many low-income countries.”

Hurricane losses set new cat record in 2017: Munich Re

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