The re/insurance industry is expected to cover more than half of the total economic costs from natural and man-made catastrophes in 2018, which are estimated to be around $155 billion, according to the latest sigma report from Swiss Re.
Swiss Re predicts that global re/insured catastrophe losses will reach $79 billion in 2018, which would be higher than the annual average of the past 10 years ($71 billion) and the fourth costliest year on sigma records.
Nevertheless, catastrophe losses are still considerably lower than in 2017, when re/insurers covered $150 billion of the total global economic cost of $350 billion.
Losses this year were largely driven by a number of smaller and mid-sized disaster events across all regions, in contrast to the major loss drivers in 2017, which notably included Hurricanes Harvey, Irma, and Maria.
The sigma report found that natural catastrophes were responsible for $146 billion of the total 2018 economic loss, while man-made disasters made up the remaining $9 billion.
With regard to insured losses, natural catastrophes accounted for $71 billion of the 2018 total, while man-made disasters accounted for $8 billion.
More than 11,000 people died or went missing in catastrophe events in 2018, Swiss Re noted, with the September earthquake in Sulawesi Indonesia inflicting the highest human toll at 3,500 dead or missing.
The report stressed that this year’s catastrophe losses highlight the increasing vulnerability of the ever-growing concentration of humans and property values on coastlines and in the urban-wildlife interface, meaning that extreme weather conditions more frequently turn into catastrophe events.
Examples of the most devastating catastrophe events in 2018 include: Hurricanes Michael and Florence; Typhoons Jebi, Trami and Mangkhut; heat waves, droughts and wildfires in Europe and California; floods in Japan and India; earthquakes in Japan, Indonesia and Papa New Guinea; and volcano eruptions in Hawaii.
The majority of these events occurred in the second half of the year, Swiss Re noted, with catastrophes in the first half of 2018 driving just $20 billion of insured losses.
Swiss Re stipulated that its current loss estimates are preliminary and may be subject to change as further loss-generating events are assessed.