Impact Forecasting, the catastrophe model development center at Aon Benfield, has issued its mid-year Global Catastrophe Recap report, aggregating the key global natural disaster perils data for the first half of 2014.
The data showed that economic losses from global natural disasters during the six month period ending June 30, 2014 totaled $54 billion (2013: $95 billion) – around 49 percent lower than the 10 year (2004-2013) average of $106 billion.
Insured losses for the period reached $22 billion (2013: $27 billion) – approximately 19 percent below the 10 year average of $27 billion – with around 55 percent of insured losses occurring in the United States, 23 percent in Europe, and 19 percent in Asia.
Steve Bowen, the associate director and meteorologist within Aon Benfield's Impact Forecasting team, said, “Despite some well documented natural disaster events during the first half of 2014, our data show that losses from both an economic and insured perspective were each below their recent averages. However, a relatively quiet first six months does not mean a similar trend will continue throughout the rest of the year.”
Around 39 percent of global economic losses sustained during the first half of 2014 were covered by either private or government-sponsored insurance programs, slightly above the 10 year (2004-2013) average of 30 percent, highlighting that a greater proportion of disaster losses occurred in regions with higher insurance penetration.
The severe thunderstorm peril was the costliest disaster type, accounting for 32 percent of the economic loss and 46 percent of the insured loss during the period, and comprising mainly hail and wind events in the U.S. and Europe.
In order of size, the five largest economic loss events in the first half of 2014 were Japan winter weather in February ($6.25 billion); Southern and Eastern European flooding in May ($4.5 billion); Brazil drought from January to June ($4.3 billion); U.S. drought from January to June ($4 billion); and severe weather in Europe in June ($3.5 billion).
In total, the report noted, the first half of 2014 comprised seven separate billion-dollar insured loss events, with four occurring in the U.S., two in Europe, and one in Asia.
Looking ahead to the second half of 2014, Mr. Bowen said, “The third quarter historically is the costliest for natural disasters and is primarily driven by the peak of the Atlantic hurricane season. While the pending El Niño is likely to limit the overall number of storms in the basin, it would only take one major landfalling event to quickly make 2014 an above average year for losses – and history suggests that it is just a matter of time before the U.S. endures another major hurricane.”
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].