Global insurer Munich Re, parent company of Roanoke Underwriting, earlier this month released a review of 2017’s natural catastrophes. Hurricanes Harvey, Irma and Maria, along with Mexico’s severe earthquake and other disasters, are estimated to cost the insurance industry a record $135 billion. Add to this uninsured losses, and the cost for overall losses is at $330 billion, the second-highest figure ever recorded for natural disasters, cites Munich Re.
“This year’s extreme natural catastrophes show how important insurance is in absorbing financial losses in the wake of such disasters,” said Torsten Jeworrek, Munich Re Board member responsible for global reinsurance business. “Munich Re is willing to develop this business further – we have the necessary capacity and expertise. For me, a key point is that some of the catastrophic events, such as the series of three extremely damaging hurricanes, or the very severe flooding in South Asia after extraordinarily heavy monsoon rains, are giving us a foretaste of what is to come. Because even though individual events cannot be directly traced to climate change, our experts expect such extreme weather to occur more often in future.”
Inside U.S. Losses
Following are several of Munich Re’s findings from last year’s losses as they relate to the U.S.:
- The share of losses in 2017 for the U.S. was 50% compared to the long-term average of 32%.
- Hurricane Harvey, a Category 4 storm that hit the Houston area, is responsible for overall losses of about $85 billion, making it the costliest natural disaster of 2017.
- In September, Hurricane Irma, a Category 5 storm, destroyed the Caribbean before hitting the Florida Keys and then making landfall on the southwest coast of Florida. While Florida experienced moderate losses, Hurricane Irma ended up being the costliest natural disaster for insurers in 2017, with insured losses of around $32 billion.
- Hurricane Maria slammed the island of Puerto Rico, a U.S. territory, on September 20 as a Category 4 storm. Production facilities, including those used to manufacture pharmaceuticals, were affected. Infrastructure on the island was almost totally crippled. Many, in fact, have been living without power for four months and are just now coming back on the grid. As of mid-January, 40% of the island is still without power.
- Severe thunderstorms last spring, with accompanying tornadoes and hail, also contributed to the heavy U.S. losses. No less than five tornado-hail outbreaks caused insured losses in excess of $1 billion each.
- Northern California’s wildfires in October resulted in overall losses of $10.5 billion, with insured losses expected at about $8 billion.
The most significant takeaway in the aftermath of these events, cites Tony Kuczinski, President and CEO of Munich Re, U.S., is the importance of mitigation and improved risk management, as evidenced by the stronger building codes adopted in Florida, which “can work to reduce losses and promote safety.” Another takeaway is the continued substantial insurance gap that exists – “even in a highly developed market like the United States where, for example, the vast majority of home and small business owners do not purchase flood insurance,” notes Mr. Kuczinski. “Our industry’s risk expertise, capital strength, and claims-handling infrastructure are critical to finding meaningful solutions, and Munich Re is an active participant in the public-private partnership that seeks to offer more Flood insurance options and promote flood protection.”
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