Global reinsurance giant Munich Re has revealed an $80 billion industry loss from 2018’s natural catastrophes, a figure which, despite falling well short of the $350 billion inflicted in 2017, represents a near doubling of the $41 billion 30-year average.
This estimate by Munich Re mirrors Swiss Re’s prediction last month that global re/insured catastrophe losses would reach $79 billion in 2018.
In the autumn, California was ravaged by its worst ever wildfire season for the second year running, with the Camp and Woolsey wildfires between them contributing $18 billion to the year’s overall insured loss.
2018 also saw Japan hit by an unusually high number of natural catastrophes. The typhoon season saw a total of seven storms hit or skirt the country’s islands.
The severest storm was typhoon Jebi with an insured loss of around $9 billion, making it one of the costliest typhoons in Japan’s history.
Following a relatively quiet start to the North Atlantic season, a flurry of hurricane activity took off in early September which led named storms in the U.S to cause one-fifth of overall losses worldwide.
The costliest event was Hurricane Michael, which reached the U.S mainland on 10 October on the northwest Florida coast. With wind speeds of 250 km/h, it was the fourth-strongest storm ever to hit the U.S.
Given the extensive wind damage from Michael, insured losses came to $10 billion as storm cover is widespread in the U.S both in the private and commercial-industrial sectors.
By contrast, Munich Re says the share of insured losses was much lower from Hurricane Florence ($5 billion), which had hit the North Carolina coast just three weeks earlier.
The company says this was because most of the losses caused by Florence were due to flooding caused from Florence’s torrential rains, and insurance against flood damage is much less widespread in the U.S than windstorm coverage.
Munich Re Board member Torsten Jeworrek states that 2018 saw several major natural catastrophes with high insured losses.
“These included the unusual phenomenon of severe tropical cyclones occurring both in the US and Japan while autumn wildfires devastated parts of California,” Jeworrek says.
He adds that such massive wildfires appear to be occurring more frequently as a result of climate change and that “Action is urgently needed on building codes and land use to help prevent losses.”
More significantly, Jeworrek questions whether, given the greater frequency of unusual loss events and the possible links between them, insurers need to examine whether the events of 2018 were already on their models’ radar.
If not, Jeworrek asks whether the industry needs to realign its risk management techniques and underwriting strategies.
For a more comprehensive view of the major industry loss events to have affected the insurance and reinsurance market in recent years, be sure to visit our ‘significant insurance industry losses, events & data’ page.