The $158 billion total is significantly higher than the $94 billion losses in 2015, and was caused by large natural catastrophes, such as earthquakes and floods, according to Swiss Re.
Insured losses were also higher in 2016 at around $49 billion, compared with $37 billion in the previous year. However, the gap between total losses and insured losses in 2016 shows that many events took place in areas where insurance coverage was low.
Losses resulting from man-made disasters fell to $7 billion from $9 billion in 2015. Globally, there were approximately 10,000 victims in disaster events in 2016.
Natural catastrophes accounted for $150 billion of the total economic losses in 2016. Insured losses from natural catastrophe events were $42 billion in 2016, up from $28 billion in 2015, but slightly below the annual average of the previous 10 years ($46 billion). Man-made disasters triggered an additional $7 billion in insurance claims in 2016.
Schisms in earthquake insurance coverage
There were a number of major earthquakes across the world in 2016, for example in Taiwan, Japan, Ecuador, Italy and New Zealand. Among the largest was the 7.0-magnitude quake that struck the Kumamoto prefecture in Japan on April 16, 2016, part of a series of strong shocks and aftershocks in the region.
The quakes resulted in extensive structural damage, fires and collapsed buildings, and claimed 137 lives. The total economic cost was at least $20 billion, of which $5 billion was insured. The Kumamoto quakes were the costliest disaster event globally of the year.
Later in the year, central Italy was struck by an earthquake in August destroying some small towns and killing 299 people. There were other strong quakes in October which added to the destruction, but no loss of life.
Government sources estimate that the overall reconstruction cost for the August earthquake alone will be as high as $5 billion. Insured losses for that event, however, are only a fraction of the total, estimated at $70 million by Perils AG, mainly from commercial assets.
"Society is underinsured against earthquake risk," Swiss Re Chief Economist Kurt Karl says. "And the protection gap is a global concern. For example, Italy is the 8th largest economy in the world, yet only 1 percent of homes in Italy are insured against earthquake risk. Most of the reconstruction cost burden of this year's quakes there will fall on households and society at large."
High losses from severe storms in the U.S.
In October, Hurricane Matthew caused devastation across the east Caribbean and southeastern United States. Economic losses were $8 billion, with insured losses estimated to be in excess of $4 billion. Hurricane Matthew was the strongest of the season and also the deadliest natural catastrophe of the year globally, claiming up to 733 lives, most of those lost in Haiti.
There were a number of severe weather events in the United States in 2016, including a series of severe hail and thunder storms. The costliest was a hailstorm that struck Texas in April, resulting in economic losses of $3.5 billion and insured losses of $3 billion, as large hailstones inflicted heavy damage to property.
"In this case, because households and businesses were insured, they were much better protected against the financial losses resulting from the storms," Karl stated.
Widespread flooding in the U.S., Europe and Asia
Several large-scale flood events hit the U.S. in 2016. The biggest was in August when heavy rains caused widespread flooding in Louisiana and Mississippi. The economic losses from this event totaled $10 billion, while private insured losses were at least $1 billion (estimate does not include the losses covered by the National Flood Insurance Program).
Europe and Asia also experienced heavy flooding. In Europe in late May and early June, two slow-moving low-pressure systems caused thunderstorms, flash floods and river flooding, with France and Germany hit the most. The storms and floods led to total losses of $3.9 billion, and insured losses of $2.9 billion.
In Asia, heavy rains throughout the year led to severe floods in China and other countries. According to public sources, total economic losses from flooding along the Yangtze River were at least $16 billion.
Biggest-ever loss for Canada's insurance industry
Wildfires in Canada were another cause of large insurance losses in 2016. The cause of the wildfires is still under investigation, and could be the result of human activity (counted as natural catastrophe losses). Because dry conditions and strong winds, once triggered, fires spread rapidly through the forests of Alberta.
The town of Fort McMurray was evacuated, and many homes there were completely destroyed. Economic losses were $3.9 billion. The area is the heart of Canada's oil sands production with a high concentration of insured economic assets. As such, the insured losses were around $2.8 billion. This is one of the costliest wildfire events in insurance industry history, and it is the biggest loss the Canadian insurance sector has ever experienced.
Note: Loss estimates are still subject to revision.