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12th August 2020
Swiss Re Institute estimates global insured catastrophe losses of $31bn in first half-mostly from secondary perils
Swiss Re Institute estimates global insured catastrophe losses of $31bn in first half of 2020, mostly from secondary perils, up from $23bn a year earlier
Natural catastrophes accounted for $28bn of the insured losses, most resulting from secondary perils events.
Severe convective storms in North America caused insured losses of over $21bn, the highest since the first half of 2011.
Disaster events claimed more than 2 000 victims in H1 2020.
Global economic losses from natural catastrophes and man-made disasters in the first half of 2020 were $75bn, according to Swiss Re Institute's preliminary sigma estimates. That was up from the $57bn for the same period a year earlier, but well below the average of first-half economic losses of the previous 10 years($112bn). Of the economic losses, around 40% were covered by insurance. In the previous 10 years, first-half insured claims averaged $36bn annually. These sigma catastrophe loss estimates are for property damage, and exclude COVID-19 related claims. More than 2 000 people lost their lives or went missing in disaster events during the first half of this year. The main driver of the first half losses were secondary perils, with thunderstorms in North America playing a significant role.
Of the $75bn in total global economic losses in the first half of 2020, natural catastrophes accounted for $72bn, up from $52bn in the year-earlier period. The remaining $3bn of losses were caused by man-made disasters, down from $5bn for the first half of 2019. This year's decline was in part due to the COVID-19 pandemic, with lockdowns across the world bringing economic activity in many countries to a near halt. Global insured losses from natural catastrophes rose to $28bn in the first half of 2020 from $19bn the year before, while insured losses from man-made disasters decreased to $3bn from $4bn.
In the North America, severe convective storms(thunderstorms with tornadoes, floods and hail) caused insured losses of over $21bn in the first half. This was the highest since the first half of 2011, when losses from this peril alone were around $30bn. In June, Calgary in Canada suffered losses of $1bn from hail damage, the costliest hailstorm event ever in Canada.
Starting from May, heavy rainfalls caused severe flooding, another example of secondary peril, in several provinces along the Yangtze River in China. Losses from fire events were mounting from the start of the year given the still burning 2019/2020 fire season in Australia, the longest (from September 2019 to February 2020) and most destructive ever. Next up, Arctic Siberia felt the brunt of wildfires as exceptionally high temperatures and dry weather provided the ideal conditions for large-scale burning. Though not counted in the first half preliminary estimates, the current ongoing fires in southern California remind of the ever-present danger that fire presents. In the future, climate change and rising temperatures will likely exacerbate secondary perils, including wildfires. "Once again, secondary perils caused most catastrophe losses in the first half of 2020. Climate change is expected to worsen and amplify the scale of secondary peril events and associated losses in the future", said Martin Bertogg, head of Cat Perils in Swiss Re.
In February, northern Europe was hit by two consecutive, intense windstorms(Ciara and Dennis). Strong wind and heavy rains caused flooding, power outages and transport disruption, causing combined insured losses of more than $2bn. Cyclone Amphan in the Bay of Bengal caused economic losses of $13bn, the most destructive tropical cyclone that India has ever experienced. Insured losses are expected to be just a fraction of the total.
"Around 60% of natural catastrophe losses in the first half of 2020 were uninsured. As the severity of secondary perils will likely increase in the coming years, the importance of the insurance industry in closing natural catastrophe protection gaps is very clear. Climate change is a systemic risk and unlike COVID-19 it doesn't have an expiry date", said Jerome Jean Haegeli, Swiss Re Group chief Economist.
The global losses for the first half of the year may be subject to upward revision. In addition, the ongoing hurricane season in the North Atlantic could generate higher losses in the remainder of the year. Up to the date of publication there have already been nine named stormed observed, a record this early in the year.
Swiss Re Trends(744 articles)