Global Disaster Costs in 2017 Estimated at $306b

Total economic losses from natural and man-made disasters have soared by 63% to strike an estimated $306 billion in 2017, reinsurance firm Swiss Re said Wednesday.

"The US was hardest hit, including by hurricanes Harvey, Irma and Maria, which have made 2017 the second costliest hurricane season” after 2005, the company said, AFP reported.

Despite the rising financial cost of disasters in 2017, the cost in terms of lives held steady. “Globally, more than 11,000 people have died or gone missing in disaster events in 2017, similar to 2016,” the Zurich-based company said.

Its preliminary estimates for the amount of insured losses from natural and man-made disasters around the world is approximately $136 billion. This is “well-above the annual average of the previous 10 years, and the third highest since… records began in 1970,” Swiss Re report said.

The reinsurance firm—which provides insurance to insurance firms—said that insured losses from disasters have exceeded $100 billion in several years. “The insurance industry has demonstrated that it can cope very well with such high losses," said Martin Bertogg, head of catastrophe perils at Swiss Re.

"However, significant protection gaps remain and if the industry is able to extend its reach, many more people and businesses can become better equipped to withstand the fallout from disaster events,” he added.

Climate-Change Disasters

Natural disasters exacerbated by climate change will cost the United States more than $200 billion.

Harvey, Irma, and Maria were among the most expensive hurricanes in US history, according to the disaster tracking group Enki Holdings. Combined with a severe and unusually long wildfire season, the government will need to pay at least $216 billion in disaster relief, more than the annual gross domestic product of Portugal.

The disaster relief bill passed by congress this fall only provides $36.5 billion to be split between both flood damage and wildfire fighting.

While 2005’s Hurricane Katrina still ranks as the costliest hurricane to hit the US at $118 billion, Harvey which brought 50 inches of rainfall to the Gulf Coast caused $92 billion in damage, while Irma and Maria cost $59 billion and $42 billion, according to the study.

Catastrophes to Push Prices Higher

Major natural disasters in 2017 like Hurricane Harvey and wildfires in California together with low prices will likely push pricing in non-life insurance and reinsurance higher, Swiss Re said in its outlook for the global insurance industry on Tuesday, Reuters reported.

The company said it expected insurance premium volumes to increase as the global economy continued to grow over the next two years. “This should further support growth in the insurance markets, with global non-life premiums forecast to rise by at least 3% and life premiums by about 4% in real terms annually in 2018 and 2019,” the report said.

General Overview

In 2016, close to 340 disasters triggered by natural hazards were registered, below the 2006-2015 annual average (376.4). After a peak in disasters in 2015 (395), this decrease could be a sign of, either a return to a declining trend in the annual number of disasters since 2005, or a precursor of a possible stabilization in the annual number of disasters.

Last year, the number of deaths caused by natural disasters (8,733) was the second lowest since 2006, largely below the 2006-2015 annual average (69,827). Inversely, the number of people reported affected by natural disasters (564.4 million) was the highest since 2006, amounting to 1.5 times its annual average (224 million).

The estimates of natural disaster economic damage ($154 billion) place last year as the fifth costliest since 2006, 12% above the 2006-2015 annual average.

The decrease in the number of reported natural disasters in 2016 was mostly due to the number of meteorological disasters (96), which was the lowest since 2006 at 21.4% below the 2006-2015 annual average (122.1). The number of hydrological disasters (177) was 6.9% below its decadal average (190.1) and the number of geophysical disasters (31) was close to its 2006-2015 annual average (31.6).

Inversely, the number of climatological disasters (38) was the fourth highest since 2006, 16.6% above its annual average (32.6).

Each year since 2006, the number of hydrological disasters still took the largest share in natural disaster occurrences in 2016 (51.8%, for an average proportion of 50.5% for the period 2006-2015), followed by meteorological disasters (28.1% versus a decadal mean proportion of 32.4%), while climatological disasters (11.1% versus an annual mean proportion of 8.7%) overpassed geophysical disasters (9.1% for a 2006-2015 mean proportion of 8.4%).