Reinsurance broker Aon Benfield named flooding as 2016’s top risk in its 2016 Annual Global Climate and Catastrophe Report released today.
2016 was the fourth consecutive year where flooding was the costliest global peril – at $62 billion it caused nearly one-third of the $210 billion global economic losses.
After flooding, the reinsurance broker listed earthquakes and severe weather as last year’s top perils in its 2016 Impact Forecasting report, which evaluates the impact of worldwide natural disaster events.
Together these top three perils made up 70% of all economic losses in 2016.
The report stated 2016’s 315 natural catastrophe events generated total economic losses of $210 billion, but only 26% ($54 billion) of this figure was covered by insurance as most damage occurred in areas with low insurance penetration.
Despite low levels of insurance protection, 2016 marked the end of a four-year downward trend for insured losses with public and private insurance and reinsurance industry losses rising to 7% above the 16-year average.
The U.S. accounted for 56% of global insured losses, although 72% of these losses occurred outside the states.
Out of the 30 billion-dollar weather-related events of 2016, only nine had insured losses at or above the $1 billion threshold.
2016 being the warmest year on record contributed notably to increased weather-related losses, Steve Bowen, Impact Forecasting Director and meteorologist, said; “climate change, more intense weather events, greater coastal exposures and population migration shifts are all contributors to the growing trend.”
Within these global parameters Bowen forecasts greater risk and vulnerability ahead; “it is anticipated that weather-related catastrophe losses will further increase in the coming years.”
A series of April earthquakes in Japan was the costliest event both economically ($38billion in losses) and for the insurance industry ($5.5 billion).
A ‘secondary’ peril – wildfire – in Fort McMurray, Canada cost the industry nearly $3.0 billion, catapulting it in top five insured losses for 2016.
The most significant flood events were along the Yangtze River basin in China and in the US state of Louisiana.