2016’s insured loss estimates have smashed expectations reaching $39.5 billion, the highest figure since four years, when 2012 losses rose to $60 billion, according to reinsurance broker Willis Re.
The global advisory broking and solutions company released a report today listing last year’s major natural catastrophe event losses in terms of insured cost.
The reported increase in insured losses comes after the reinsurance industry saw years of a mostly downwards trend in global natural catastrophe losses, with these dropping from a ground-breaking $120 billion in 2011 down to just $23 billion in 2015.
Executive Director, Catastrophe Analytics, Willis Re International, John Alarcon, said; “despite natural catastrophe insured losses falling in the last five years to 2016, they are still significant, and lower profile perils such as the wildfire around Fort McMurray have the potential to cause substantial losses.”
Willis Re reported the largest single insured loss reached over $4.8 billion, after a series of high magnitude earthquakes struck the Japanese city of Kumamoto.
Canada’s Fort McMurray wildfire ravaged large areas of the region, causing estimated insured losses of around $3.5 billion, making this catastrophe more than double Canada’s previous record for insured loss from a single disaster.
Catastrophe Indices and Quantification (CatIQ), a company that provides analytical and meteorological information on Canadian natural and man-made catastrophes to the industry and its stakeholders, released a higher figure for Fort McMurray costs at an estimated $3.7 billion.
And hurricane Matthew in early October resulted in the largest single insured loss in the United States at $2.3 billion in 2016, and the combined effects of windstorms Elvira and Friedrike in Europe in the summer produced losses of approximately $2.48 billion.
2016 was the fourth consecutive year where flooding was the costliest global peril – at $62 billion it caused nearly one-third of the $210 billion global economic losses.
Willis Re highlighted the need to find ways to close this substantial protection gap – the gap between insured and economic losses post-event; “The insurance industry has a significant role to play in helping economic recovery by supporting resilient societies and closing the protection gap between insured and total economic loss when natural catastrophes occur,” Alarcon said.
The firm’s Executive Vice President, Prasad Gunturi, added; “Natural catastrophe events in the U.S., notably the severe thunderstorms in Texas during March and April, and Hurricane Matthew in early October, emphasize the crucial role the insurance industry plays in rebuilding communities.”