Nat cat losses down but insurers must better grasp climate change: Munich Re

A series of hailstorms and tornadoes in the US dominated the natural catastrophe statistics in the first half of 2017 though nat cat losses from January to June were below average, according to Munich Re, which warned on the importance of re/insurers understanding climate change – both natural and man-made.

Overall losses came to $41 billion. The corresponding figure for the first six months of 2016 was $111 billion; the average for the last ten years $102 billion. Insured losses totalled $19.5 billion (previous year: $32 billion; ten-year average $29 billion).

The highest overall losses in the first half-year were caused by the floods in Peru in February and March with a figure of $3.1 billion, $380 million of which was insured. The costliest event for insurers was a powerful thunderstorm in the US in early May, with insured losses of $1.8 billion and overall losses of $2.2 billion.

The high number of severe thunderstorms in the USA is presumed to have been at least partially influenced by a natural climate phenomenon, according to Munich Re, especially in the first quarter of 2017: the tropical eastern Pacific off the northwest coast of South America was exceptionally warm, a phenomenon that the Peruvian authorities have dubbed “coastal El Niño”, despite the fact that it is not a full-blown El Niño event.

Munich Re Board member Torsten Jeworrek said: “The exceptional accumulation of severe thunderstorms in the US highlights just how important it is for insurers to have in-depth knowledge of natural catastrophes and how these are affected by climatic changes. This is true of both natural climatic changes and those that are man-made. Insurers not only help to overcome losses, they also improve our understanding of what triggers them. This is a fundamental basis for preventing future losses.”

Peter Höppe, head of Munich Re’s Geo Risks Research, added: “The unusual atmospheric conditions in the USA in the first half of 2017 provided the perfect conditions for powerful supercell thunderstorms, which frequently bring major hailstorms and tornadoes. The number of tornadoes observed in the first quarter of 2017 was twice as high as the average for the last ten years.”

Thunderstorms in the US were responsible for three of the world’s five costliest loss events in the first half of the year, each causing economic losses of over $ 2 billion. The total economic loss from these storms amounted to $18.5 billion, of which $13.5 billion was insured.

Tony Kuczinski, president and CEO of Munich Reinsurance America, added: “During the first half of 2017, we continued to clearly see the impacts of tornado and hail events in the United States in terms of damage to homes and business, which ultimately result in direct and indirect losses to the economy. Munich Re continues to participate in important research being conducted to improve the way we build our homes and businesses, with the ultimate goal to make them more resistant to the impacts of weather related events. Preventative measures can reduce vulnerability, and preparing for loss or damage can increase resilience. These measures protect assets and save lives.”

Don't miss our monthly insurtech email newsletter - sign up today

Today’s stories

Pioneer appoints head of catastrophe risk in London

Ed hires divisional director for A&H and contingency business

Chubb appoints regional manager to lead commercial insurance in US

RT Specialty expands to Hawaii with new office and key hires

ISO expands commercial inland marine programmes

Lockton hires Hartnett and Spears as new producers in US

Did you enjoy reading this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.