Insured catastrophe losses at $19bn in H1 2019; Swiss Re highlights protection gap in emerging countries

Insured losses from global catastrophe events were estimated at $19 billion in the first half of 2019, mainly driven by secondary perils such as thunderstorms and flooding events, according to the new Swiss Re sigma report.

Overall, catastrophe events resulted in global economic losses of $44 billion in H1 2019, slightly down from $45 billion a year earlier. Natural catastrophes accounted for the majority ($40 billion) of these losses, while the remaining $4 billion of losses were caused by man-made disasters.

According to Swiss Re, this figure is well below $109 billion, the average first-half economic losses of the previous ten years. It is also lower than the losses of $51 billion reported for the same period a year earlier.

Global insured losses from natural catastrophes also fell to $15 billion from $21 billion the year before, while insured losses from man-made disasters decreased to $4 billion from $5 billion in H1 2018.

Swiss Re report noted that secondary perils such as thunderstorms, torrential rains and snowmelt caused the highest losses through wind and water damage in the first half of 2019 in many regions of the world, including the US, Canada, Europe, Australia, China and Iran. Swiss Re Institute's sigma estimates the total economic losses of these events at $32 billion. Approximately $13 billion of these losses were insured.

As in the first half of 2018, several parts of the world also experienced heatwaves and dry weather conditions this year, with temperature records broken in several locations, particularly in Europe. The full impact of the extreme summer weather is yet to be determined.

According to the report, only about 42 percent of the global economic losses were insured (compared with 52 percent in the first half of 2018) as several large-scale disaster events, such as cyclone Idai in southern Africa and cyclone Fani in India, occurred in areas with low insurance penetration.

Cyclone Idai, which caused strong winds and severe flooding across Mozambique, Malawi, Zimbabwe and Madagascar, was the deadliest natural catastrophe in the first half of this year. Economic losses from cyclone Idai are estimated at least at $2 billion, of which only about 7 percent were insured.

Martin Bertogg, head of catastrophe perils at Swiss Re, said: "The experience of the first half of this year has once again exposed the existing protection gap issues in emerging countries. For example, cyclone Idai showed just how fragile African coastal communities are. And in India, cyclone Fani inflicted widespread damage and large uninsured losses. Similarly, the nature and location of the events underline the theme of secondary perils taking a larger share of the overall loss burden, as we analyzed in more detail in our last catastrophe sigma."

Bertogg added: "Intense heatwaves and dry spells of the like we've seen over the last few years are expected to become more frequent, exacerbating the conditions conducive to wildfires and agriculture losses. We also expect more variable rain patterns, as rising temperatures load the atmosphere with more vapour. Society will need to adapt and prepare for these increasing occurrences."

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