Secondary perils again accounted for the majority of catastrophe losses, globally
Global insured losses in 2019 estimated to be around $56bn, below the 10-year average, according to the Swiss Re Institute.
Tropical cyclone activity in the second half of 2019 pushed overall insurance losses higher after a benign first half of the year.
And, as in recent years, a number of smaller and mid-sized loss-generating disaster events (so-called secondary perils) accounted for more than 50% of the insured losses.
2019’s insured loss figure was down from $93bn in 2018, and below the annual average ($75bn) of the previous decade.
Natural catastrophes accounted for some $133bn of economic losses in 2019, down from $166bn a year earlier.
Total economic losses from natural and man-made catastrophes fell to around $140bn in 2019 from $176bn last year, according to preliminary sigma estimates.
Disaster events claimed more than 11,000 victims in 2019, according to the reinsurer.
Tropical cyclones inflicted devastation in different parts of the world, Swiss Re emphasised.
In the first half of the year, cyclones Idai and Kenneth in Mozambique and neighbouring countries, and Cyclone Fani in India, left trails of destruction and suffering to local communities, costing 1,400 lives.
Insured claims were very low given the low insurance penetration in the impacted regions, Swiss Re noted.
In the second half of 2019, the Bahamas and North Carolina in the US were hit by Hurricane Dorian, which caused insured losses of about $4.5bn.
Japan was hit by two devastating typhoons within a short period, the reinsurer said.
Typhoon Faxai hit the Kanto region In mid-September, including the Greater Tokyo Area, with insured losses estimated to be approximately $7bn.
In early October Typhoon Hagibis struck the same region, causing further widespread damage across Japan. Total insured losses from Hagibis are estimated to be around $8bn.
After some years of relative calm, the experience of the last two years reaffirms that typhoon risk remains a major vulnerability for Japan.
Faxai and Hagibis followed Typhoon Jebi in 2018, which resulted in substantial insurance losses of close to $13bn.
This year’s typhoons further underscore the high exposure of urban regions in Japan to both typhoon wind and flood risks despite the presence of mitigation infrastructure, Swiss Re said.
While climate change cannot be ruled out as an amplifying risk factor, it is certain that the last three events confirm the historical pattern of devastating Japanese typhoons in the middle of the 20th century.
Secondary perils devastating as ever: climate change taking its toll, Swiss Re said.
This year also saw heatwaves and dry spells, with new temperature highs recorded in several locations around the world, from Europe to Australia.
Wildfires have affected Australia, Indonesia, the US, Canada, the Amazon region and Siberia, among others.
Devastating floods hit many regions in 2019, Swiss Re observed.
Severe monsoon rains led to extensive flooding in India, Bangladesh and Nepal, and there were repeated flood events in other regions, including China, the US, Europe, Canada and Australia.
Thunderstorms and hailstorms have caused damage to property, vehicles and agriculture in many parts of the world.
Together, secondary perils are estimated to comprise more than 50% of this year’s global insured losses from natural catastrophes, demonstrating once again the very significant impact these events can inflict on societies.
Climate change is leading to more frequent and more severe secondary peril events, which manifest in different ways: more local flooding, torrential rains, prolonged drought, severe wildfires and other extreme weather events.
The Swiss Re Institute’s report Insurance in a world of climate extremes: what latest science tells us suggests a more differentiated picture on the impact of climate change on the insurance industry.
“For primary perils like typhoons, science is far less conclusive,” said Martin Bertogg, head of catastrophe perils at the Swiss Re Institute.
“There is more scientific evidence that climate change impacts the frequency and severity of secondary peril events today, warranting more focus for research,” he said.
“In addition, macro risk factors like rapidly growing populations and property values in exposed areas contribute to the increase in losses resulting from natural catastrophes globally, making past experience a less definite predictor for future losses,” Bertogg added.