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Chiamaka Ajeamo
Global insurance and reinsurance companies have recorded a loss of $56 billion, out of the $ 140 billion losses arising from both natural and man-made disasters in 2019.
This was disclosed by Swiss Reinsurance Institute in its 2019 Disaster Estimates report.
According to the report, insured losses declined significantly from the $93 billion recorded in 2018, and are well below the annual average of $75 billion for the previous 10 years.
Giving reasons for this, the report states that tropical cyclone activity in the second half of 2019 triggered overall reinsurance and insurance losses higher after a benign first half of the year, whereas smaller and mid-sized events ended up accounting for more than 50 per cent of the losses.
It added that economic losses were also considerably lower than the $176 billion recorded last year, with natural catastrophes making up $133 billion of the losses in 2019, and $166 billion in 2018.
A further analysis of the data revealed that, insured losses from natural catastrophes were $50 billion in 2019 against $84 billion in 2018, while losses from man-made disasters were $6 billion compared with $9 billion in 2018.
However, data from Sigma Reinsurance pegged Hurricane Dorian, and Typhoons Faxai and Hagibis as the most significant loss events of the year, with insured losses estimated at around $4.5 billion, $7 billion, and $8 billion respectively.
“After some years of relative calm, the experience of the last two years reaffirms that typhoon risk remains a major vulnerability for Japan,” Swiss Reinsurance stated, noting that the country’s urban region remains vulnerable despite the presence of mitigation infrastructure.
The report also highlights the potential impact of climate change on these storm losses, although it says this issue was possibly more clearly underscored by the series of heatwaves and dry spells around the world last year.
New temperature highs, for example, led to devastating wildfires in parts of the world like Australia, Indonesia, the US, Canada, the Amazon region and Siberia, among others, while flooding and hailstorms caused severe damage to property, vehicles, and agriculture around the globe.
“Climate change is leading to more frequent and more severe secondary peril events, which manifest in different ways like more local flooding, torrential rains, prolonged drought, severe wildfires, and other extreme weather events,
Commenting on the report, Head Catastrophe Perils at the Swiss Reinsurance Institute, Martin Bertogg, said: “There is more scientific evidence that climate change impacts the frequency and severity of secondary peril events today, warranting more focus for research. For primary perils like typhoons, science is far less conclusive”
“Also, macro risk factors like rapidly growing populations and property values in exposed areas contribute to the increase in losses resulting from natural catastrophes globally, making experience a less definite predictor for future losses.”
Notwithstanding, Swiss Reinsurance noted that its loss estimates currently remain subject to change, as not all loss-generating events have yet been fully assessed.
