Earthquakes in Asia and Italy, flooding in the United States, Asia and Europe, a deadly hurricane along with wildfires in Canada, made 2016 the costliest 12 months for natural catastrophe losses in the last four years, according to reinsurer Munich Re.
Losses totaled $175 billion, a good two-thirds more than in the previous year, and nearly as high as the figure for 2012 ($180 billion).
The share of uninsured losses — the so-called protection or insurance gap — remained substantial at around 70 percent. Almost 30 percent of the losses, some $50 billion, were insured.
“After three years of relatively low nat cat losses, the figures for 2016 are back in the mid-range, where they are expected to be. Losses in a single year are obviously random and cannot be seen as a trend”, said member of the Munich Re Board of Management Torsten Jeworrek.
“The high percentage of uninsured losses, especially in emerging markets and developing countries, remains a concern. Greater insurance density is important, as it helps to alleviate the financial consequences of a catastrophe for more people. With its risk knowledge, the insurance industry would in fact be able to bear a much greater portion of such unpredictable risks.”
Earthquake in Japan most expensive
The costliest natural catastrophes of the year occurred in Asia. There were two earthquakes on the southern Japanese island of Kyushu close to the city of Kumamoto in April (overall losses $31 billion; proportion of insured losses just under 20 percent), and devastating floods in China in June and July (overall losses $20 billion; only some 2 percent of which were insured).
North America was hit by more loss occurrences in 2016 than in any other year since 1980, with 160 events recorded. The year’s most serious event here was Hurricane Matthew. Its greatest impact was in the Caribbean island nation of Haiti, which was still struggling to recover from the 2010 earthquake.
Matthew killed around 550 people in Haiti, and also caused serious damage on the east coast of the United States. Overall losses totaled $10.2 billion with over a third of this figure insured.
Key natural catastrophe figures of 2016
- Both overall losses and insured losses were above the inflation-adjusted average for the past 10 years ($154 billion and $45.1 billion respectively).
- Taking very small events out of the equation, 750 relevant loss events such as earthquakes, storms, floods, droughts and heatwaves were recorded in the Munich Re NatCatSERVICE database. That is significantly above the 10-year average of 590.
- Some 8,700 lives were sadly lost as a result of these natural catastrophes, far fewer at least than in 2015 (25,400), yet within the 10-year average (60,600). The past year was thus the year with the fewest fatalities (after 2014, with 8,050 fatalities) in 30 years (1986: 8,600).
- The high number of flood events, including river flooding and flash floods, was exceptional and accounted for 34 percent of overall losses, compared with an average of 21 percent over the past 10 years.
The costliest catastrophes of 2016
Series of storms in Europe, wildfires in Canada
North America was also impacted by other extreme weather hazards, including wildfires in the Canadian town of Fort McMurray in May, and major floods in the southern U.S. states in summer. In Canada, the mild winter with less snow than usual, and the spring heatwaves and droughts which followed, were the principal causes of the devastating wildfires that hit the oil-sand-producing region of Alberta, generating overall losses of $4 billion. More than two-thirds of this figure was insured.
In August, floods in Louisiana and other U.S. states following persistent rain triggered losses totaling $10 billion, around a quarter of which was insured.
There was a series of storms in Europe in late May and early June. Torrential rain triggered numerous flash floods, particularly in Germany, and there was major flooding on the River Seine in and around Paris. Overall losses totalled some $6 billion, around half of which was insured.