Reinsurance News

Flooding in Asia drives $10 billion economic loss in July: Aon

9th August 2017 - Author: Luke Gallin

During the month of July severe flooding in Asia contributed to economic losses of $10 billion in the region, according to the July 2017 Global Catastrophe Recap report from Impact Forecasting, the catastrophe risk modelling arm of reinsurance broker Aon Benfield.

asia-globeAcross numerous parts of Asia throughout the second-half of June and into July, 2017, severe and seasonal flooding resulted in economic losses in the region of $10 billion. According to Aon’s report, China experienced the greatest impact from the flooding, which left almost 200 people from the country either dead or missing, while damaging or destroying hundreds of thousands of homes.

According to the Ministry of Civil Affairs, combined economic flood damage over a six-week period totalled more than $10 billion, the majority of which occurred in the Yangtze River Basin.

The landfall of tropical storm Nanmadol in Japan also brought heavy flooding. Over 2,600 homes and other structures were either damaged or destroyed, and flooding and landslides hit Fukuoka, Oita, Shimane, Kumamoto, and Hiroshima prefectures, driving expected economic losses of nearly $1 billion.

“There was no shortage of global natural disasters during July, though the vast majority were reported in Asia where enhanced seasonal monsoon rainfall over China and throughout South Asia led to significant flooding that caused considerable loss of life, and billions of dollars of damage to property and agriculture. In addition, three tropical cyclones in the region enhanced the monsoonal flow to trigger further flooding in multiple countries.

“Given low levels of insurance penetration in the region, the majority of these losses are expected to be uninsured, highlighting the considerable protection gap and the potential for re/insurers to further offer their specialist risk management skills,” said Claire Darbinyan, Impact Forecasting Associate Director, and Meteorologist.

Monsoon rains in parts of India, Bangladesh and Pakistan damaged property and claimed hundreds of lives, and is expected to result in economic losses in the hundreds of million of U.S. dollars.

Seasonal rains in parts of Thailand claimed at least 23 lives in the period, and is expected to result in an economic loss of $300 million.

Flooding in Switzerland in July resulted in insurance payouts of almost $90 million, explains the report.

Turkey experienced two separate powerful thunderstorms in July, which, brought large hail storms that increased damages alongside flooding. The report states that Turkish insurance firms expect combined claims payouts for the two events to reach $440 million, with the economic loss being higher.

Parts of the U.S. also experienced severe thunderstorms and flooding in July, 2017, with total combined economic and insurance industry losses expected to reach the hundreds of million of U.S. dollars.

Elsewhere in the world in the month of July, 2017, severe weather impacted parts of China, Canada, and Europe. Drought conditions in Italy cost the economy $2.3 billion in losses in July, while extreme heat and drought conditions led to wildfire damage in parts of the U.S., Canada, Portugal, France, and also the Balkans.

$44 million of economic damage was also recorded in July in Vietnam, as a result of tropical storm Talas. Earthquakes in the Philippines, Greece, Turkey, and China also drove economic losses in July, while a strong winter storm in New Zealand brought flooding and wind damage, resulting in economic losses in the million of U.S. dollars.

As noted by Aon it is expected that the insured loss in Asia will be just a fraction of the economic loss, owing to Asia’s low insurance penetration in relation to its high exposure to a range of natural disasters. This highlights the growing protection gap (disparity between economic and insured losses post-event) in many parts of the world, and the need for more risk transfer to reach more corners of the world.

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