istock-636145876_sezer-alcinkaya-
iStock/sezer-alcinkaya
10 April 2019Insurance

Rising secondary perils a ‘wake-up call’ for insurers: Swiss Re

Global insured losses from natural catastrophes in 2018 were $76 billion, with over 60 percent resulting from so-called “secondary” perils - small-to-mid sized events or secondary effects of a primary peril, a Swiss Re sigma study has revealed.

2018’s insured losses represented the fourth highest in Swiss Re’s sigma records, and the combined insured cat losses for 2017-2018 were $219 billion, the highest ever on a two-year period.

2017 featured the highest ever aggregate natural disaster insurance claims in a single year - and over half were due to secondary perils.

According to the report, secondary perils come in two forms. The first are independent, high-frequency, low-to-medium severity loss events, for example river floods, torrential rainfall, landslides, thunderstorms, winter storms, drought and wildfire outbreaks. The second are events that occur as secondary effects of a primary peril, for example hurricane-induced precipitation, storm surges, tsunamis, liquefaction and fire following earthquakes.

Swiss Re explained that losses from secondary perils are rising due to urbanisation, a rising concentration of assets in areas exposed to extreme weather conditions, and climate change.

“The catastrophe loss experience of the last two years is a wake-up call for the insurance industry, highlighting a trend of growing devastation wreaked by so-called ‘secondary’ perils,” Swiss Re said.

“Insurers need to focus more on primary and secondary perils to be able to underwrite catastrophe business sustainably and build global resilience,” Swiss Re added.

Edouard Schmid, Swiss Re’s group chief underwriting officer, said: “Large losses from secondary perils are occurring more regularly. This is a trend the insurance industry must act on so that we can continue to underwrite catastrophe business sustainably.”

Jérôme Jean Haegeli, Swiss Re’s group chief economist, commented: “The existing protection gap is an opportunity for insurers to strengthen global resilience. Underwriting catastrophe business profitably means looking at peak and also forward-looking trends on secondary perils. By leveraging latest technology, insurers can focus more on developing appropriately regionalised models to assess the risk posed by secondary perils and develop a greater product range and targeted distribution for catastrophe covers.”

Get all the latest re/insurance industry news with our daily newsletter -  sign up here.

More of today's news

Beazley bolsters board with former Direct Line CFO and Microsoft UK COO

McLarens to launch new agriculture division as it refocuses growth strategy

AmTrust-backed cyber MGA launches broker portal, API platform targeting SMEs

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

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk


More on this story

Insurance
4 July 2019   Global insurance premiums reached $5 trillion “for first time ever” in 2018, equivalent to more than 6 percent of the world’s gross domestic product (GDP), according to the latest Sigma study.
Insurance
18 April 2019   Property insurance losses for the ‘Dragi-Eberhard’ winter storms that swept through Europe in March 2019 are initially estimated to be €740m, according to Perils, the Zurich-based data provider.
Insurance
22 January 2019   An analysis of catastrophe losses in 2018 shows that the protection gap is not closing and that catastrophe risk has continued to evolve and is more complex than ever, according to Aon’s latest Weather, Climate & Catastrophe Insight: 2018 Annual Report.