H1 nat cat and disaster losses almost half the ten-year average

Insured nat cat and disaster losses during the first half of 2018 were almost half the ten-year average, making any moves by insurers to raise rates less likely and more difficult to justify. According to preliminary Swiss Re figures, first-half nat cat and man-made disaster losses of $20bn were well down on the $35bn ten-year average. Swiss Re’s numbers compare with Aon’s data, which pegs global insured nat cat losses in H1 at $21bn, and 40% lower than the ten-year average. Munich Re’s estimates $17bn of insured losses from natural disasters, in line with its longer-term 30-year average. Swiss Re’s sigma numbers place insured losses from nat cats at $18bn in the first half of 2018, compared to a ten-year average of $30bn. Man-made disaster losses stood at just $2bn, from an average of $5bn during the past decade. According to Swiss Re, nat cat losses in the first six months of this year were down 33% on the $25bn recorded in the same period of 2017. Man-made disaster losses were down 57% on the $5bn in the same period last year. Combined losses were 33% lower than the $30bn recorded in H1 2017, the reinsurer’s numbers show. Swiss Re places global economic losses from natural catastrophes and man-made disasters in H1 at $36bn, far below the ten-year average of $125bn and down 44% on the $64bn in the first half of 2017. Nearly 56% of all first-half global economic losses were insured, as most events occurred in areas with high insurance penetration, it explained. Aon’s numbers reveal that insurance covered just under half of H1’s total natural disaster economic loss of $45bn. This is 64% below the ten-year average of $124bn, Aon said. Economic losses were the lowest since 2005 at $33bn, and about half the $68.3bn 30-year average, said Munich Re. It noted that the insured-loss figure was about two-thirds of the $25.5bn recorded in the first half of last year, with economic losses in H1 2017 totalling $65bn. Globally, about 3,900 people lost their lives or went missing in disaster events during the first six months of 2018, Swiss Re found. This is the lowest half-year total in more than three decades and compares to approximately 4,600 for the same period in 2017, it said. Aon’s Impact Forecasting said natural catastrophes claimed more than 2,150 lives during the first six months of 2018. This is the lowest number it has recorded since 1986 and just a fraction of the long-term average of 36,570. Aon said 156 natural disasters were recorded in the first half of 2018. This is above an 18-year average of 142, but the period passed without a mega catastrophe exceeding losses of $10bn. However, at least 15 natural catastrophes cost more than $1bn during the first six months of the year, according to the broker. A series of winter storms in Europe and the US caused the largest insured and economic losses in the first half of 2018. According to the reinsurers, European winter storm Friederike was the costliest event. It caused significant losses in Germany and the Netherlands, although France, Belgium and the UK were also impacted. Estimated total economic losses stand at $2.7bn, with approximately $2.1bn insured. Europe was held in winter’s grasp until well into March and was followed by thunderstorms and flash floods caused by warm weather in May and early June over Germany and France. Losses from the subsequent flooding totalled $2bn, said Munich Re, with just under half covered by insurance. Winter losses in Europe totalled $4.8bn during the first half, with insurance covering $3.6bn of the cost, according to the reinsurer. Meanwhile, a series of winter storms in the US, including the ‘Nor’easter’ storm in March, brought heavy snow, ice, freezing rains and flooding from snowmelt and coastal flooding to large parts of the US. These caused combined economic losses of $4bn and insured losses of $2.9bn, said Swiss Re. Aon reported that the US suffered the highest number of large losses in H1, with six events in excess of $1bn; followed by Europe, the Middle East and Africa (EMEA) with four; and Asia-Pacific with four. Asia-Pacific recorded the most disasters in total at 55, followed by EMEA with 44, the US 37 and the Americas 20, Aon said. Despite lower average insured losses globally, the EMEA region and the Americas recorded higher mean and median losses in the first half of 2018 compared to 18-year averages, the broker found. EMEA losses were higher due to windstorm claims, while the Americas experienced winter storms and severe weather events in Canada, said Aon. Steve Bowen, Impact Forecasting director and meteorologist, said that first-half nat cat and disaster losses were “largely manageable for the re/insurance industry”. They certainly will not make it easy for the risk transfer market to push through rate rises. Various data has already shown that reinsurance capital is higher today than at the year-end, when the market was dealing with heavy losses from the Atlantic hurricane season. While average global commercial insurance prices have risen slightly for the third quarter in a row, they were still down a touch in continental Europe with the rating environment mostly stable, according to Marsh. Dean Klisura, president, global placement and specialties at the broker, said: “The global property insurance market continues to be impacted by last year’s losses, and we are now seeing increases in financial and professional lines pricing in several regions. However, overall pricing is generally stable across all lines of business and market capacity remains strong.” Low first-half losses suggest such market dynamics will continue and may even move more favourably in the direction of insureds.

H1 nat cat and disaster losses almost half the ten-year average

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