According to reinsurer Munich Re, Roanoke Underwriting’s parent company, earthquakes in Asia and Italy, flooding in the United States, Asia, and Europe, a deadly hurricane along with wildfires in Canada, made 2016 the costliest 12 months for natural catastrophe losses in the last four years. Losses totaled $175 billion, two-thirds more than 2015, and were nearly as high as in 2012, which saw losses of $180 billion. The share of uninsured losses – the so-called protection or insurance gap – remained substantial at around 70%. Almost 30% of the losses, some $50 billion, were insured, cites Munich Re.

“After three years of relatively low nat cat losses, the figures for 2016 are back in the mid-range, where they are expected to be. Losses in a single year are obviously random and cannot be seen as a trend”, said a member of the Munich Re Board of Management Torsten Jeworrek. “The high percentage of uninsured losses, especially in emerging markets and developing countries, remains a concern. Greater insurance density is important, as it helps to alleviate the financial consequences of a catastrophe for more people. With its risk knowledge, the insurance industry would, in fact, be able to bear a much greater portion of such unpredictable risks.”

Asia Tops Losses

The costliest losses for 2016 occurred in Asia with the Kumamoto earthquakes that shook the southern Japanese island of Kyushu last April, experiencing overall losses of $31 billion with insured losses at just under 20%; and the devastating floods in China in June and July with overall losses of $20 billion and only about 2% insured. The Kumamoto earthquakes caused plant closings at Toyota, Honda, and Nissan and production disruptions and damage at the following electronics plants: Renesas Electronics, Mitsubishi Electric, Sony, and SUMCO – reinforcing how major disasters have ripple effects on the global supply chain. The earthquakes were the strongest to hit Japan since the Tohoku quake that devastated the northeast coast of Japan near Sendai in 2011.

Imapct on North America

North America was hit by more natural disasters than in any year since 1980, with overall losses totaling $10.2 billion (with over one-third of this figure insured) and Hurricane Matthew the most serious event. The hurricane’s greatest impact was in Haiti, where it killed around 550 people.

According to the Munich Re report, North America was also impacted by other extreme weather hazards, including wildfires in the Canadian town of Fort McMurray in May, and major floods in the southern US states in summer. In Canada, the mild winter with less snow than usual, and the spring heatwaves and droughts which followed, were the principal causes of the devastating wildfires that hit the oil-sand-producing region of Alberta, generating overall losses of $4 billion. More than two-thirds of this figure was insured.

In August, floods in Louisiana and other U.S. states following persistent rain triggered losses totaling $10 billion, around a quarter of which was insured.

Series Of European Storms

There was a series of storms in Europe in late May and early June. Torrential rain triggered numerous flash floods, particularly in Germany, and there was major flooding on the River Seine in and around Paris. Overall losses totaled some $6 billion, around half of which was insured.
Globally, 8,700 people were killed by natural disasters in 2016, far fewer than the 25,400 fatalities in 2015 and the 10-year average of 60,600.

“There are now many indications that certain events – such as persistent weather systems or storms bringing torrential rain and hail – are more likely to occur in certain regions as a result of climate change,” said Peter Hoeppe, Head of Munich Re’s Geo Risks Research Unit.

About Roanoke Underwriting

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