Preliminary estimates from Swiss Re Institute suggest that total economic losses from natural and man-made disasters were around $140 billion in 2019, of which $56 billion were covered by insurance and reinsurance.
Notably, insured losses are down significantly from the $93 billion recorded last year, and are well below the annual average of $75 billion for the previous 10 years.
Tropical cyclone activity in the second half of 2019 pushed overall re/insurance losses higher after a benign first half to the year, but smaller and mid-sized events ended up accounting for more than 50% of losses.
Economic losses were also considerably lower than the $176 billion recorded last year, with natural catastrophes making up $133 billion of the losses in 2019, and $166 billion in 2018.
According to Swiss Re, insured losses from natural catastrophes were $50 billion this year, versus $84 billion in 2018, while losses from man-made disasters were $6 billion, compared with $9 billion last year.
Sigma data pegged Hurricane Dorian, and Typhoons Faxai and Hagibis as the most significant loss events of the year, with insured losses estimated at around $4.5 billion, $7 billion, and $8 billion, respectively.
“After some years of relative calm, the experience of the last two years reaffirms that typhoon risk remains a major vulnerability for Japan,” Swiss Re stated, noting that the country’s urban region remain vulnerable despite the presence of mitigation infrastructure.
The reinsurer also highlighted the potential impact of climate change on these storm losses, although it said this issue was possibly more clearly underscored by the series of heatwaves and dry spells around the world this year.
New temperature highs, for example, led to devastating wildfires in Australia, Indonesia, the US, Canada, the Amazon region and Siberia, among others, while flooding and hailstorms caused severe damage to property, vehicles and agriculture around the globe.
“Climate change is leading to more frequent and more severe secondary peril events, which manifest in different ways: more local flooding, torrential rains, prolonged drought, severe wildfires and other extreme weather events,” Swiss Re reported.
Martin Bertogg, Head Catastrophe Perils at the Swiss Re Institute, also commented: “There is more scientific evidence that climate change impacts the frequency and severity of secondary peril events today, warranting more focus for research. For primary perils like typhoons, science is far less conclusive”
He continued: “In addition, macro risk factors like rapidly growing populations and property values in exposed areas contribute to the increase in losses resulting from natural catastrophes globally, making past experience a less definite predictor for future losses.”
Swiss Re stipulated that its loss estimates currently remain subject to change, as not all loss-generating events have yet been fully assessed.