AIR Worldwide has estimated the global modeled insured average annual loss from catastrophes worldwide at about US$92 billion.

According to AIR, the one percent aggregate exceedance probability insured loss (or the 100-year return period loss) was nearly US$288 billion – more than double the record losses seen in 2017 from Hurricanes Harvey, Irma, and Maria and other natural catastrophes.

AIR said that its new report derived its loss metrics from the most current suite of global property and crop models from AIR, including new models and updates released during 2019 as well as databases of property values for more than 110 countries; the report excluded losses from AIR's pandemic, cyber, and casualty models.

"With the insight provided by AIR's global suite of models, companies can pursue profitable expansion in a market that's ever more connected and amid regulatory environments that are increasingly rigorous," said Rob Newbold, executive vice president at AIR Worldwide. "The ability to take a comprehensive global view can give insurers and reinsurers greater confidence that the risk they've assumed is risk they can afford to take."

AIR's report discussed global economic losses from catastrophes, which can vastly exceed insured losses depending on the region and peril. This "protection gap," the difference between economic and insured losses, highlighted the significant burden facing society when a disaster strikes.

According to AIR, although the protection gap often was thought of as a problem confined to the developing world, the two earthquakes that struck Southern California in the first week of July – only 34 hours and less than seven miles apart – highlighted the fact that this issue could affect nations with highly developed insurance markets; statewide, only about 15 percent of California homeowners have earthquake insurance.

"While the global insurance industry continues to shine a light on the protection gap, our analyses indicate there's still work to be done to address the disparity between economic and insured losses," said Bill Churney, president at AIR Worldwide. "With modeled average annual loss at less than a quarter of the global economic estimate, we're not seeing a significant narrowing trend. History has shown that higher insurance take-up allows society to recover more quickly from extreme events, and AIR will continue to work with the insurance and reinsurance industry, businesses, governments, and non-governmental organizations to reduce the protection gap."

Mr. Newbold concluded, "With four months left in 2019, there's still the possibility of experiencing significant insured losses. In 2018, the top three insured losses globally were caused by events that occurred after September 1: the Camp Fire, Hurricane Michael, and Typhoon Jebi."

Victoria Spears

Victoria Spears

Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].

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