Munich Re and Aon both issued reports this week on the economic and insurance costs of global natural catastrophes during the first half, which varied in magnitude by $7 billion. While Munich Re estimated that natural disasters across the globe produced economic losses of around $68 billion, Aon’s Impact Forecasting estimated that overall losses were $75 billion.
On the other hand, insured losses came to $27 billion during H1, according to Munich Re, while Aon estimated that insured losses were $30 billion.
Munich Re said the overall loss estimate of $68 billion was slightly lower than the 30-year average of $74 billion, adjusted for inflation, while insured losses of $27 billion were higher than the average of $20 billion, due to the large proportion of weather disaster losses in North America.
Using a 19-year time frame for comparisons, Aon said, total economic losses ($75 billion) were 23% lower than the 2000-2019 average of $98 billion, while insured losses ($30 billion) were 8% higher than the average of $28 billion.
Severe Convective Storms
Both Munich Re and Aon agreed that a good portion of the higher insured losses were the result of severe weather disaster losses, mainly in North America.
Indeed, North America accounted for 47% of the globe’s overall economic losses from natural disasters and for 82% of insured losses during the first half of 2020, which are significantly higher than the long-term averages of 35% and 60%, respectively, said Munich Re, explaining that these losses were caused by severe thunderstorms with tornadoes, flash floods and hail.
In total, severe thunderstorms in North America were responsible for $27 billion of overall losses and for $20 billion of insured losses during the first half of the year, said Munich Re.
“Much of the natural disaster impact came via the severe convective storm peril,” acknowledged Steve Bowen, director and meteorologist on the Impact Forecasting team at Aon’s Reinsurance Solutions business.
“A record 10 individual thunderstorm-related events has more than $1 billion in economic losses in the United States alone during the first six months of the year, while Australia and Canada each dealt with severe hailstorms that prompted billion-dollar damage bills,” he added.
The Aon report said that seven of these U.S. storm events each had $1 billion-plus in insured losses.
“While we cannot attribute individual events to climate change, the trend in our data clearly shows that losses from severe thunderstorms, particularly in North America, are on the rise, largely as a result of population and exposure growth in suburban and exurban regions as well as increased property values and poor construction practices,” said Ernst Rauch, chief climate and Geo Scientist at Munich Re, in a statement in the report.
“A contribution of climate change is also seen likely because higher temperatures and greater humidity favour the development of weather patterns like these. Even in these times of global pandemic, we should not forget that climate change is also a risk with systemic elements,” Rauch continued.
Active Hurricane and Wildfire Seasons
Both Munich Re and Aon warned of the peak of the Atlantic hurricane season and La Niña” weather conditions, which could exacerbate losses in the second half of 2020.
Munich Re said an above average hurricane season and a more extreme California wildfire season are possible in the second half of 2020, as a result of “La Niña” weather conditions.
La Niña conditions are forecast to develop during the main months of the hurricane season – August to October – which can promote the development and intensification of tropical cyclones over the tropical Atlantic, said Munich Re in its report.
California’s wildfire season could also be more extreme, “as La Niña-type conditions typically create unusually dry conditions across the region in autumn, delaying the usual winter rains,” it continued.
Other findings from the two reports include:
- Cyclone Amphan in India was the costliest natural disaster of the first half of 2020, said Munich Re, noting that only a small proportion of the losses were insured. Munich Re’s loss economic loss estimate was $11.5 billion, while Aon estimated $11 billion.
- Severe weather in the United States from April 10-14 killed 38 people and was the costliest insured event, with claims totaling nearly $3 billion – Aon.
- Bushfires in Australia in the 2019/2020 summer season causes overall losses of around $2 billion, of which $1.6 billion was insured – Munich Re.
- Winter storm Ciara (known as Sabine in Germany) in February was the costliest natural disaster in Europe, producing an overall loss of $1.8 billion of which $1.2 billion was insured – Munich Re.
- A total of 207 global natural disaster events during H1 was above the 20-year average of 184 and the median of 189 – Aon.
- There were at least 20 separate billion-dollar economic events during H1, led by the U.S. with 10 events; Asia Pacific with five events; Europe, Middle East and Africa (EMEA) with three events, and the Americas with two events – Aon.
- Natural disasters caused approximately 2,200 deaths across the globe during the first half, significantly below the long-term (1980-2019) average of 39,800 and the median of 7,700 – Aon.
- Flooding was the deadliest natural period, responsible for 60% of the death toll – Aon.
Munich Re’s report is: “Very high losses from thunderstorms – The natural disaster figures for the first half of 2020.”
Aon’s Impact Forecasting report is: “Global Catastrophe Recap: First Half of 2020.”
Source: Munich Re and Aon
*This story ran previously in our sister publication Insurance Journal.