Overall losses and insured losses from natural catastrophes during the first half of 2015 were below long-term average values, according to a review of global natural catastrophes issued by Munich Re.
Total natural catastrophe losses incurred in the first half of 2015 were US$35 billion, whereas the average value for the last 30 years is approximately US$64 billion, when adjusted for inflation. Insured losses for this year so far have been US$12 billion, compared with a long-term average of US$15 billion, Munich Re said.
During the first six months of 2015, more than 16,000 people died in earthquakes and severe weather events, the review said. It noted that two of these events, the earthquakes in Nepal and the heatwave in India and Pakistan, killed some 12,000 people.
By the end of June, the number of people who lost their lives in natural catastrophes was much greater than in the previous year (2,800), but also far lower than the average for the past 30 years (27,000), the Munich Re report said.
“The natural catastrophes in the first half of the year show us once again that vulnerability to natural catastrophes needs to be reduced, particularly in emerging and developing countries,” said Torsten Jeworrek, Munich Re board member with responsibility for global reinsurance business. “This is necessary first of all to ensure people are better protected, but also to keep losses as low as possible.”
Munich Re provided a summary of the main global catastrophes that occurred in the first half:
- On April 25, a magnitude 7.8 earthquake caused catastrophic devastation throughout Nepal, but principally in the capital Kathmandu. A total of 8,850 people were killed, and many cultural heritage sites were destroyed. During the first half, it was the natural catastrophe with the largest number of fatalities and the one with the highest losses, which totaled US$ 4.5 billion, of which only US$140 million was insured. The scale of the losses for Nepal itself becomes clear when looking at the country’s economic strength: the losses accounted for almost a quarter of Nepal’s annual gross domestic product, Munich Re said. A further 230 people lost their lives in a 7.3 magnitude earthquake two and a half weeks later.
- The costliest natural catastrophe for the insurance industry in the first half of the year was a series of winter storms that struck the northeastern United States and Canada at the end of February. The insured loss was US$1.8 billion, with total losses of US$2.4 billion.
- As in the previous year, the winter in the northeastern U.S. was exceptionally cold and snowy. In Boston, almost three meters of snow fell during the winter months, which was a record. The snow transported out of the city was piled up on an open site at the harbor. The mountain of snow grew to such a size that it was still many meters high at the end of May. There were direct overall losses of US$4.3 billion in the U.S. from the harsh winter of 2014/15, of which US$3.2 billion was insured. This figure does not include indirect losses due to delayed flights, power failures and business interruptions. The shorter period from January to the end of the winter accounted for US$3.8 billion of overall losses and US$2.9 billion of insured losses.
- Between April and June, there was a series of severe weather events in the south of the U.S. as far as Mexico, which were unusual for the region in terms of severity. Each resulted in losses of over US$1 billion, of which approximately US$ 0.75 billion was insured. In the first six months, losses in the U.S. from severe weather events like these, in some cases accompanied by tornadoes or hail, caused losses of US$ 6.5 billion, of which US$ 4.8 billion was insured.
- Owing to the very cold and long winter, the tornado season in the U.S. began somewhat later than usual with a few storms. But from May onwards, the number of severe storms increased significantly, with tornadoes up to the second highest category of EF-4, and with wind speeds of up to 300 km/h. As of July 1, the number of registered tornadoes, at 830, was below the average for 2005–2014 (1,008).
- The costliest natural catastrophe in Europe was winter storm Niklas, which swept across large areas of central Europe in the closing days of March, with wind speeds peaking at approximately 200 km/h. A large number of buildings and vehicles were damaged. The overall loss was US$1.4 billion (€1.3 billion), of which around US$1 billion (€900 million) was insured. Generally speaking, with 13 winter storms, the season in Europe was a relatively active one compared with the long-term seasonal average of 4.6.
- At the close of the first half of the year, there was an exceptionally strong heatwave in India and Pakistan that caused the deaths of 3,600 people. While heatwaves in the region are not uncommon before the start of the monsoon season, the temperatures, which climbed as high as 47°C, were exceptional. In some regions there was little wind, accompanied by high humidity, which only increased the extreme effect of the temperatures.
- In April in southeast Australia, flash floods washed away entire houses. The cruise ship Carnival Spirit had to wait for two days off the coast, in waves that sometimes reached over 10 meters in height, before it was able to enter Sydney Harbour. The overall loss from the severe weather event was US$ 1.15 billion, of which US$630 million was insured. Cyclone Marcia, a cyclone of the strongest category 5, made landfall in February in Queensland, in the Northeast of the country, but swept through the thinly populated region of Shoalwater Bay. The overall loss was more than US$800 million, of which US$400 million was insured.
El Niño Southern Oscillation
The development of many weather-related events this year is consistent with the current form of the El Niño Southern Oscillation (ENSO), in the Pacific, which influences various weather extremes in many parts of the world, Munich Re said in its review. The moderate to strong El Niño conditions are leading to severe and more frequent thunderstorms with tornadoes in the southern U.S. In addition, very strong tropical cyclones in the Pacific occur more frequently with these conditions, whereas the development of hurricanes in the North Atlantic tends to diminish.
The already intense El Niño phase is expected to become even stronger in the autumn, and will likely abate at the beginning of next year, the report said. The stronger an El Niño is, the more likely it is that the ENSO oscillation will switch to a La Niña phase in the following year. The influences on the different weather extremes then tend to be reversed.
“So the trends for 2015, with a large number of severe weather events in the south of the USA, and little hurricane activity in the North Atlantic so far, could therefore be expected,” explained Peter Höppe, head of Geo Risks Research at Munich Re. “Likewise, the severity of the heatwave in India and Pakistan was probably partially influenced by the El Niño conditions.”
However, warned against sounding the all-clear for the 2015 hurricane season. Hurricane Andrew, for example, struck in 1992 in what had been a generally very quiet season, yet it was one of the most severe tropical cyclones ever recorded. With overall losses of US$26.5 billion, of which US$17 billion was insured, Andrew remains the fourth costliest storm in history, even adjusted for inflation.
“The El Niño phase has an influence on hurricane activity, but not on whether and where a storm makes landfall. So if a severe storm should develop and hit a conurbation, losses of an equal magnitude are possible,” said Höppe.
Source: Munich Re