Fresh reporting from Aon Benfield pegs 2017 as the costliest year on record for weather disasters, with the tally for losses and recovery reaching $353 billion.
The National Centers for Environmental Information (NCEI) previously reported that the cost of 2017’s natural disasters in the U.S. could exceed $306 billion, which was already a U.S. annual record.
The second most costly year for natural disasters in the U.S. was 2005, when Hurricanes Dennis, Katrina, Rita and Wilma drove the annual cost in the U.S. to $214.8 billion, according to NCIE.
Both estimates are considerably higher than data released on December 2017 by Swiss Re, which determined that global losses from natural disasters for the year were $306 billion with $188 billion attributable to events in the U.S.
"The high cost of disasters in 2017 served as a reminder that we continue to face increasing levels of risk as more people and exposures are located in areas that are particularly vulnerable to major, naturally occurring events," Steve Bowen, Impact Forecasting director and meteorologist, said in a press release. "As weather scenarios grow more volatile in their size and potential impact, it becomes more imperative than ever to identify ways to increase awareness, improve communication, and lower the insurance protection gap."
|Mother Nature's fury
According to Aon's reporting, there were 330 natural catastrophe events in 2017, the vast majority of which were such weather-related events as Hurricanes Harvey, Irma and Maria in the U.S. along with Typhoon Hato in China and Cyclone Debbie in Australia.
The "Weather, Climate & Catastrophe Insight: 2017 Annual Report" released by Impact Forecasting, Aon Benfield’s catastrophe model development team notes that 36% of the losses were insured.
"While 2017 was an expensive year for the insurance industry, the reinsurance market had an estimated USD600 billion in available capital to withstand the high volume of payouts," Aon Benfield CEO Eric Andersen said in a press release. “Most critically, the US weather and wildfire events in particular have demonstrated the value of reinsurance, with claims being paid in an average of eight days to augment the recovery process.”
Here are some other findings from the report that may be of interest to the insurance industry:
The U.S. experienced 16 weather events that each cost at least a billion dollars. There were 31 of these worldwide.
- Wildfires caused $14 billion of insurance losses in 2017.
- Natural disasters accounted for 10,000 human fatalities in 2017.
- The single deadliest event in 2017 was a massive landslide in Sierra Leone in which 1,100 people died.
- Northern California’s wildfire outbreak in October caused nearly $13 billion in damage.
"We know natural disasters are going to occur," Bowen concludes. "The question is how prepared are we going to be when the next one strikes."
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Elana Ashanti Jefferson
Elana Ashanti Jefferson serves as ALM's PropertyCasualty360 Group Chief Editor. She is a veteran journalist and communications professional. Reach her by sending an e-mail to [email protected].
