Big Disasters, Big Costs: The bill doubled in 2016
Total economic losses from natural catastrophes and man-made disasters amounted to $ 175 billion in 2016, almost twice the $ 94 billion seen in 2015, the latest sigma study from the Swiss Re Institute says.
The losses in 2016 – both economic and insured – were the highest since 2012 and reversed the downtrend of the last four years. This was due to a high number of sizable disaster events, including earthquakes, storms, floods and wildfires in 2016, across all regions. Some events struck areas with high insurance penetration, which accounted for the 42% increase in insured losses. That also means that many people in those areas were better equipped to recover from the shock of a disaster, for example with prompt settlement of their insurance claims.
Globally there were 327 disaster events in 2016, 191 of them natural catastrophes and 136 man-made. As in the previous four years, Asia was hit worst in terms of the number of disaster events, with 128, and resulting economic losses that totaled roughly $60 billion. The earthquake on Kyushu Island, Japan, in April inflicted the heaviest economic losses, ranging between $25 billion and $30 billion.
Worldwide, around 11 000 people lost their lives or went missing in disasters in 2016, down from more than 26 000 in 2015.
Global insured losses last year were $ 54 billion, significantly higher than in 2015 and in line with the inflation-adjusted annual average of the previous 10-years ($ 53 billion). Natural catastrophes resulted in claims of $46 billion, the same as the 10-year annual average. Insured losses from man-made disasters were $ 8 billion, down from $ 10 billion in 2015.
"In 2016, both economic and insured losses were close to their 10-year averages. Insured losses made up about 30% of total losses, with some areas faring much better because of higher insurance penetration," says Kurt Karl, Chief Economist of Swiss Re. “In many parts of the world, insurance can play a much bigger role in helping households and communities recover from the losses and shock that disasters can inflict.”
For example, North America accounted for more than half the global insured losses in 2016. This was largely due to a record number of severe convective storm events in the US, and the level of insurance penetration for such storm risks in the US is high. The costliest was a hailstorm that struck Texas in April, resulting in economic losses of $ 3.5 billion, of which $ 3 billion were insured, so about 86% of losses were covered.
In terms of devastation wreaked, there were large-scale disaster events across all regions in 2016, including earthquakes in Japan, Ecuador, Tanzania, Italy and New Zealand. In Canada, a wildfire across the wide expanses of Alberta and Saskatchewan turned out to be the country's biggest insurance loss event ever, and the second costliest wildfire on sigma records globally. There were also a number of severe flood events in 2016, in the US, Europe and Asia, and there was Hurricane Matthew, the first Category 5 storm to form over the North Atlantic since 2007. Matthew caused the largest loss of life – more than 700 people died, mostly in Haiti – of a single event.