Impact Forecasting, the catastrophe risk modelling unit of reinsurance broker Aon Benfield, has said that total natural disaster losses in 2017 reached $353 billion, while insured losses reached $134 billion.
Of the $353 billion, a huge 97%, or $344 billion was due to weather-related events, which includes the impacts of hurricanes Harvey, Irma and Maria on parts of the U.S. and the Caribbean, Typhoon Hato in China, Cyclone Debbie in Australia, the devastating wildfires in California, amongst other notable events.
The $353 billion economic loss bill is from 330 natural catastrophe events in 2017, and Aon Benfield’s 2017 report reveals that roughly 38%, or $134 billion will be covered by the insurance and reinsurance industry.
The report, ‘Weather, Climate & Catastrophe Insight: 2017 Annual Report,’ shows that the $134 billion insured loss in 2017 is just below the record $137 billion insured loss record in 2011.
Furthermore, global insured losses in 2017 is nearly 140% higher than the $56 billion recorded in 2016, which Aon Benfield says is mostly a result of high insurance penetration in the U.S., which suffered a very active Atlantic hurricane season in 2017, as well as the wildfires.
Aon Benfield’s Chief Executive Officer (CEO), Eric Andersen, said; “While 2017 was an expensive year for the insurance industry, the reinsurance market had an estimated USD600 billion in available capital to withstand the high volume of payouts. Most critically, the US weather and wildfire events in particular have demonstrated the value of reinsurance, with claims being paid in an average of eight days to augment the recovery process.”
According to the report, 31 billion-dollar events occurred across the world in 2017, with 16 of these being in the U.S. Hurricanes Harvey, Irma and Maria contributed greatly to the overall economic loss in 2017, and Aon Benfield explains that 36%, or $80 billion of the economic damage from the three hurricanes was insured.
$14 billion of the insured loss total was a result of wildfires in 2017, which is actually the highest ever recorded for the peril.
10,000 people lost their lives to natural disasters in 2017, with the deadliest event being the huge landslide in Sierra Leone, which claimed the lives of over 1,100 people.
Outside of the U.S., substantial flooding in China resulted in more than $12 billion of damage in 2017, while an extended drought in Southern Europe caused $6.6 billion in damage. Furthermore, two powerful earthquakes struck Mexico, resulting in almost $6 billion in damage.
Impact Forecasting Director and Meteorologist, Steve Bowen, said; “The high cost of disasters in 2017 served as a reminder that we continue to face increasing levels of risk as more people and exposures are located in areas that are particularly vulnerable to major, naturally occurring events. As weather scenarios grow more volatile in their size and potential impact, it becomes more imperative than ever to identify ways to increase awareness, improve communication, and lower the insurance protection gap. We know natural disasters are going to occur. The question is how prepared are we going to be when the next one strikes.”