Climate change fuels $80bn insured nat cat losses in 2018: Munich Re

Man-made climate change events, in particular wildfires, pushed 2018 insured losses beyond the long-term average to $80bn, Munich Re said on releasing cat loss statistics for the year. Overall losses from global natural catastrophes totalled $160bn in 2018 with insurers covering exactly half that amount, according to the reinsurer. The $80bn of insured losses is well down on 2017’s record $140bn figure, but double the 30-year average of $41bn. Munich Re’s numbers compare with Swiss Re’s estimate of $79bn insured losses and economic losses of $155bn. “There are clear indications of the influence that man-made climate change has had on devastating wildfires in California, which, like last year, again caused billions in losses in 2018,” Munich Re said. Board member Torsten Jeworrek said the link between wildfires and climate change is clear. “Action is urgently needed on building codes and land use to help prevent losses. Given the greater frequency of unusual loss events and the possible links between them, insurers need to examine whether the events of 2018 were already on their models’ radar or whether they need to realign their risk management and underwriting strategies,” Mr Jeworrek said. Northern California’s Camp Fire, which destroyed the town of Paradise, was the costliest event of 2018 with total losses of $16.5bn and insured losses of $12.5bn. Munich Re said insured losses from all wildfires in California will likely total $18bn last year, including $4bn from the Woolsey Fire in Los Angeles. Ernst Rauch, head of climate and geosciences at Munich Re, said: “We have experienced a significant increase in hot, dry summers, which has been a major factor in the formation of wildfires. Many scientists see a link between these developments and advancing climate change. This is compounded by man-made factors such as burgeoning settlements in areas close to forests at risk from wildfire.” The US also recorded the second costliest event of 2018 when Hurricane Michael caused damage totalling $16bn and insured losses of $10bn. Hurricane Florence, which mainly caused flood damage, recorded lower insured losses at $5bn, although economic damages were similar to Hurricane Michael at $14bn. In Europe, agricultural losses and wildfires caused by sustained drought recorded the continent’s costliest event with total losses of $3.9bn, although only a small amount was insured at about $280m. Munich Re said many European countries were without rain for several months during the hot, dry summer of 2018. As well as affecting agricultural crops, rivers ran too low to carry goods, catching out some companies uninsured against the impact of weather fluctuations. Only this week, Swiss Re Corporate Solutions launched a parametric solution to protect companies from changes in water levels. “In many countries, farmers only take out insurance against individual perils, usually hail. As agriculture is likely to suffer even greater effects of climate change, such as longer droughts, multi-peril insurance systems that also cover drought would certainly make sense,” Munich Re said, adding this would need co-financing from the public sector. Munich Re said the 2018 cyclone season was unusual because named tropical storms occurred in all northern hemisphere ocean basins, with seven typhoons in Japan and two major hurricanes in the US. Worldwide, cyclones recorded above-average losses of $56bn, with about half of these insured. In Japan, Typhoon Jebi recorded losses of $12.5bn, with insurance accounting for $9bn of the total bill. Japan also recorded two earthquakes in 2018, causing insured losses of $2bn from an overall bill of $9bn. Munich Re reported 10,400 deaths from natural catastrophe events in 2018. This is one fifth of the 30-year average of 53,000. The reinsurer said September’s Indonesian tsunami in Palu was the deadliest disaster of 2018, with 2,100 deaths. Another tsunami hit Indonesia’s islands of Sumatra and Java just before Christmas without warning, killing a further 400 people.

Climate change fuels $80bn insured nat cat losses in 2018: Munich Re

Want to read this article?

Read Next

Swedish risk managers told to focus on flexibility rather than resilience

European Parliament votes for ‘hard-fought compromise’ on CSDDD

Rates fall in most regions during Q1 but rise in Europe and US: Marsh

Major cyberattack would hike rates but insurers would ‘brush off’ losses: Lockton Re

Chubb says Q1 saw ‘best rates’ as it books $2bn profit

Swedish risk managers told to focus on flexibility rather than resilience

European Parliament votes for ‘hard-fought compromise’ on CSDDD

Rates fall in most regions during Q1 but rise in Europe and US: Marsh

Major cyberattack would hike rates but insurers would ‘brush off’ losses: Lockton Re

Chubb says Q1 saw ‘best rates’ as it books $2bn profit

Want to read this article?

Read Next

Swedish risk managers told to focus on flexibility rather than resilience

European Parliament votes for ‘hard-fought compromise’ on CSDDD

Rates fall in most regions during Q1 but rise in Europe and US: Marsh

Major cyberattack would hike rates but insurers would ‘brush off’ losses: Lockton Re

Chubb says Q1 saw ‘best rates’ as it books $2bn profit

Related Articles