Natural disasters2018 fourth costliest year in insured losses
2018 was the fourth-costliest year since 1980 in terms of insured losses. This was due to an accumulation of severe and costly events in the second half of the year. A comparison with the last 30 years shows that 2018 was above the inflation-adjusted overall loss average of $140bn. The figure for insured losses – $80bn – was significantly higher than the 30-year average of $41bn. 2018 therefore ranks among the ten costliest disaster years in terms of overall losses, and was the fourth-costliest year since 1980 for the insurance industry.
When compared with the record losses of the previous year from Hurricanes Harvey, Irma and Maria, the indications at the start of 2018 were that it would be a more moderate year. However, the second half of the year saw an accumulation of billion-dollar losses from floods, tropical cyclones in the United States and Japan, wildfires and earthquakes. The overall economic impact was $160bn, of which $80bn was insured.
A comparison with the last 30 years shows that 2018 was above the inflation-adjusted overall loss average of $140bn. The figure for insured losses – $80bn – was significantly higher than the 30-year average of $41bn. 2018 therefore ranks among the ten costliest disaster years in terms of overall losses, and was the fourth-costliest year since 1980 for the insurance industry.
In particular, Hurricanes Michael and Florence in the Atlantic, and Typhoons Jebi, Mangkhut and Trami in Asia, all left their mark. Overall losses from tropical cyclones in 2018 came to roughly $57bn, of which $29bn was insured. There was also an extremely high impact from wildfires in California that produced overall losses of $24bn and insured losses of $18bn. Over the course of the year, 29 events each resulted in an overall loss of $1bn or more.
Munich Re says that roughly 50 percent of global macroeconomic losses from natural catastrophes in 2018 were insured, a significantly higher percentage than the long-term average of 28 percent. North America accounted for 68 percent of insured losses, Asia for 23 percent and Europe for 8 percent. The remaining losses of less than 1 percent were divided between South America, Africa, Australia and Oceania.
Payouts by the insurance industry helped to boost catastrophe resilience, in other words the ability after a disaster to return to normality as quickly as possible. However, industrialized countries still account for the vast majority of insurance payouts following natural catastrophes. There has been a steadily growing willingness in these countries to take out cover against natural hazards since the 1980s. The situation with insurance protection in emerging and developing countries is quite different, despite the fact that, for financially weak and low-income countries, improving risk management and resilience-building systems is an important way of mitigating the impact of humanitarian disasters and promoting sustainable economic growth.
