Global re/insurance broker Aon has released its catastrophe loss estimate for 2019, putting overall economic losses at £232 billion, of which the insurance industry is thought to have covered $71 billion.
Analysts based this figure on 409 recorded catastrophe events in 2019, and noted that the economic loss was 20% lower than the average over the last decade.
Insurance industry losses were also lower than the long-term average this year, and were significantly down from the $100 billion recorded in 2018 and $157 billion in 2017.
Aon similarly noted that the protection gap was 69% last year, representing the fifth-lowest gap since 2000.
Despite recording below-average losses, the broker’s estimate is significantly higher than the figures previously released by reinsurers Swiss Re and Munich Re.
Swiss Re said in December that it was anticipating $140 billion of global economic losses in 2019, of which $56 billion were predicted to be covered by insurance and reinsurance.
Munich Re meanwhile, put economic losses at $150 billion and re/insured losses at $52 billion. Notably, Munich Re’s estimate was based on a total of 820 natural and man-made catastrophe events – more than twice the number recorded by Aon.
According to Aon’s estimates, 2019 included 41 billion-dollar economic loss events and 12 billion-dollar loss events, with the costliest two insurance events being Typhoons Hagibis and Faxai, which caused industry losses of roughly $9 billion and $6 billion, respectively.
The costliest individual peril was inland flooding, which caused economic losses globally of $82 billion, preceded by tropical cyclone at $68 billion.
“Following two costly back-to-back years for natural disasters in 2017 and 2018, there were several moderately large catastrophes but strong capitalization has allowed the re/insurance industry to comfortably manage recent losses,” said Andy Marcell, CEO of Aon’s Reinsurance Solutions business.
“However, as socioeconomic patterns further combine with scientific factors such as climate change or extreme weather variability, the potential financial costs at play are only going to increase so building resilience is key.”
Considered in full, 2010-2019 marked the costliest decade on record with economic damage reaching $2.98 trillion – some $1.19 trillion higher than 2000-2009 and with Asia-Pacific accounting for 44%.
During this time, private and public insurance entities paid out $845 billion with the US accounting for 55% alone.
From a climate perspective, 2019 was the second warmest year on record for land and ocean temperatures since 1851, with record temperatures of 46.0°C seen in France and 42.6°C in Germany.
The January to May period was also the wettest on record in the US, with 15.71 inches (399 millimeters) of rainfall.
“Perhaps the biggest takeaway from the last decade of natural disasters was the emergence of previously considered ‘secondary’ perils – such as wildfire, flood, and drought – becoming much more costly and impactful,” said Steve Bowen, Director and Meteorologist at Aon’s Impact Forecasting team.
“Scientific research indicates that climate change will continue to affect all types of weather phenomena and subsequently impact increasingly urbanized areas,” Bowen added. “As the public and private sectors balance an understanding of the science with smart business solutions, this will lead to new advances that lower the physical risk and improve overall awareness.”
