Global Catastrophe Recap: First Half of 2018 July 2018
Table of Contents Overview 3 Economic Loss Analysis 5 Insured Loss Analysis 7 Peril Highlights 9 Additional Comments 10 Contact Information 11 Global Catastrophe Recap: First Half of 2018 2
Overview Global natural disaster losses during the first half (1H) of 2018 were below average when compared against a 10-year (2008-2017) and a 21 st Century (2000-2017) baseline. As seen in Exhibit 1, economic losses were estimated at USD45 billion; down a considerable 64 percent compared to the previous decade (USD124 billion) and down 48 percent in the years since 2000 (USD87 billion). Insured losses were preliminarily estimated at USD21 billion; down 40 percent from the 10-year average of USD35 billion and down 19 percent from the 18-year average of USD26 billion. Each total is considered preliminary and subject to change. To better offset any skewed data, a median analysis was conducted to provide a different and more accurate depiction of disaster losses in recent years. This analysis shows that 2018 first half natural disaster losses were down 22 percent from the 2000-2017 median on an economic basis (USD58 billion) and just 5 percent lower on an insured loss basis (USD22 billion). EXHIBIT 1: 1H Global Natural Disaster Losses 1 EXHIBIT 2: 1H Natural Disaster Events 2 There were an estimated 156 natural disaster events which occurred in 1H 2018, which was above the 21 st Century average of 142 and the median of 147. While there was not a mega catastrophe that led to economic damage beyond USD10 billion, or a significant humanitarian event that resulted in a massive loss of life, the first six months were marked by many smaller-scale disasters. This was particularly true in Asia-Pacific (APAC), which had the most disasters in the first six months of the year (55). Europe, Middle East & Africa (EMEA) was second with 44 events, and followed by the United States (37) and the Americas (20). 1 Loss totals in billions USD and adjusted to today s dollars using the U.S. Consumer Price Index. Average & Median uses 2000-2017 baseline. 2 An event must meet at least one of the following criteria to be classified as a natural disaster: economic loss of USD50M, insured loss of USD25M, 10 fatalities, 50 injured, or 2,000 homes/structures damaged and/or filed insurance claims. Global Catastrophe Recap: First Half of 2018 3
EXHIBIT 3: 1H 2018 Economic & Insured Losses by Peril The only two perils which recorded above-average economic and insured losses was winter weather (events dominated by heavy snow, ice, frost, extended cold, etc.) and European Windstorm. Despite being the costliest peril in 1H, severe weather losses (damage resulting from thunderstorms) were 21 percent lower on an economic basis and 13 percent lower on an insured basis when comparing to years since 2000. Flooding was also well below normal: down 67 percent on an economic basis and 64 percent on an insured basis. This is primarily due to a more benign start to monsoon season across Asia. Weather Events 3 When looking at weather-only global losses, the economic impact still lagged behind the long-term averages but to a lesser degree. Weather-only economic losses were estimated at USD43 billion; down 41 percent from the 10-year average of USD73 billion and down 25 percent from the 18-year average of USD57 billion. Insured losses were preliminarily estimated at USD20 billion; down 26 percent from the 10-year average of USD27 billion and just 5 percent below the 18-year average of USD21 billion. As a reminder, each total is considered preliminary and subject to change. EXHIBIT 4: 1H Global Weather Disaster Losses 4 Fatalities Natural disasters claimed at least 2,153 lives during the first half of 2018; this number was at its lowest since 1986. It is also significantly below the long-term (1980-2017) average of 36,570 and a median of the same period (7,991). Flooding was the deadliest peril of the first two quarters of 2018, being responsible for at least 892 deaths. 3 Weather events are catastrophes spawned by atmospheric or oceanic-influenced scenarios. It does not include earthquakes, tsunamis or volcanoes. 4 Loss totals in billions USD and adjusted to today s dollars using the U.S. Consumer Price Index. Average & Median uses 2000-2017 baseline. Global Catastrophe Recap: First Half of 2018 4
Economic Loss Analysis Economic losses resulting from natural catastrophes were below average for every region of the globe. However, EMEA and the Americas were slightly above the median since 2000. At USD18 billion, the United States was 20 percent lower than the median and APAC was an even further 48 percent lower. Despite a slightly above normal or near-normal level of events, the U.S. and APAC did not record any large-scale, extremely costly disasters during the first six months. EXHIBIT 5: Natural Disaster Economic Losses by Region EXHIBIT 6: Weather Disaster Economic Losses by Region Global Catastrophe Recap: First Half of 2018 5
Billion-Dollar Events There were at least 15 separate billion-dollar events in 1H 2018 all of which were weather-related, except the June 18 earthquake in Japan. The billion-dollar events were led by the U.S. (6), EMEA (4), APAC (4), and the Americas (1). The table below lists the three events which reached the multi-billiondollar threshold (economic loss of USD2.0 billion or greater). These loss totals are preliminary and subject to change. Economic Loss Date Event Location Deaths 1 (USD) January-March Drought Argentina 0 3.4+ billion January 17-18 Windstorm Friederike Western Europe 13 2.75+ billion March 1-3 Winter Weather United States 9 2.25+ billion 1 Totals subject to change The most notable economic loss events of 1H 2018 are mapped in Exhibit 7. Events which caused at least USD1.0 billion in damage are shown with large circles, while other significant events that did not hit the billion-dollar threshold are indicated with a smaller and specific colored dot to denote event type. Note that the map includes a centrally located geocoded spot for where the most significant impacts were incurred during events which may have crossed multiple states, territories, or countries. EXHIBIT 7: 1H 2018 Notable Economic Loss Events Map Global Catastrophe Recap: First Half of 2018 6
Insured Loss Analysis Insured losses resulting from natural catastrophes, overall, were lower than the average and median dating to 2000. On a regional level, only EMEA and the Americas were each higher than their respective mean and median during that timeframe. EMEA was elevated due to an active windstorm season and the Americas were largely driven by winter storm and severe weather events in Canada. Both APAC and the United States saw lower insured losses. This was largely the result of a less active severe weather season in the United States and a quieter start to seasonal monsoon flooding across parts of Asia. EXHIBIT 8: Natural Disaster Insured Losses by Region EXHIBIT 9: Weather Disaster Insured Losses by Region Global Catastrophe Recap: First Half of 2018 7
Billion-Dollar Events There were at least 5 separate billion-dollar events for the insurance industry in 1H 2018 all of which were weather-related. The billion-dollar events were led by the U.S. (4) and EMEA (1). Three of the events were due to severe weather in the U.S., and the other two included Windstorm Friederike in Western Europe and a powerful early March U.S. winter storm. The table below lists each of the events. These loss totals are preliminary and subject to change. Date Event Location Deaths Insured Loss 1 (USD) January 17-18 Windstorm Friederike Western Europe 13 2.0+ billion March 1-3 Winter Weather United States 9 1.7+ billion June 17-21 Severe Weather United States 3 1.1+ billion May 12-15 Severe Weather United States 5 1.0+ billion March 18-21 Severe Weather United States 0 1.0+ billion 1 Totals subject to change The most notable insured loss events of 1H 2018 are mapped in Exhibit 10. Events which caused at least USD1.0 billion in claims payouts are shown with large circles, while other significant events that did not hit the billion-dollar threshold are indicated with a smaller and specific colored dot to denote event type. Note that the map includes a centrally located geocoded spot for where the most significant impacts were incurred during some events which crossed multiple states, territories, or countries. EXHIBIT 10: 1H 2018 Notable Insured Loss Events Map Global Catastrophe Recap: First Half of 2018 8
Peril Highlights Severe Convective Storm Global insured losses associated with the severe convective storm (SCS) peril payouts due to tornado, hail, damaging wind or flash flood damage were the lowest since 2015. While insurance payouts equaled the 21 st Century 1H median, it was a departure from the last two years. In 2017 alone, insured SCS losses were the second-highest on record and only behind the historic year in 2011. 1H Global Insured Loss in Billions USD: Severe Weather (Source: Impact Forecasting) Most SCS losses are typically attributed to the United States. The first six months of 2018 featured a fewer number of hail reports in the U.S., which is often the primary driver of SCS losses. Elsewhere, hail and damaging wind storms also led to noteworthy property, auto, and crop payouts in Europe. European Windstorm The costliest insurance event globally during the first two quarters of 2018 was Windstorm Friederike, which impacted parts of Western and Central Europe on January 18, on the 11 th anniversary of the costliest windstorm of the 21 st Century Kyrill. Friederike itself currently ranks as the fifth-most expensive windstorm since 2000 for insurers. Together with other notable storms during the 2017/18 windstorm season, such as Eleanor, industry losses were among the highest this century. Prior to the storm s arrival, Impact Forecasting implemented its realtime modeling capability by utilizing forecast wind data to create an event footprint and help provide clients a view of their potential losses. Less than 24 hours after the storm s peak, a final footprint was created and client portfolio-level losses were determined using actual measured wind data. This methodology is now also integrated with the U.S. hurricane wind model and available to insurers. Windstorm Friederike wind swath (Source: Impact Forecasting) Winter Weather Top 5 1H Global Insured Loss Since 2000: Winter Weather (Source: Impact Forecasting) While not typically one of the costlier perils for the insurance industry, winter storms have a history of prompting billion-dollar claims payments. Some countries that have seen costly winter storms in their history include the United States, China, Japan, and Canada. 1H 2018 was the second-costliest of any year since 2000 for insurers, and primarily driven by costly events in the U.S. Global Catastrophe Recap: First Half of 2018 9
Additional Comments As always it is critical to reiterate that losses during the first six months of the year have no correlation to eventual final year totals. The third quarter is historically the most expensive for natural disasters given the peak of tropical cyclone season in the Atlantic and Pacific Oceans. Just one major event can entirely change the trajectory of a year from a financial loss perspective. For a more detailed analysis of 2018 natural disaster events or any previous editions of the Annual Global Climate and Catastrophe Report, please see Aon Benfield s monthly Global Catastrophe Recap series, which can be found here. For additional historical natural disaster loss data and other climatological information, please visit Aon Benfield s Catastrophe Insight website: www.aonbenfield.com/catastropheinsight Global Catastrophe Recap: First Half of 2018 10
Contact Information Adam Podlaha Head of Impact Forecasting Aon Benfield Analytics Impact Forecasting +44.020.7522.3820 adam.podlaha@aonbenfield.com Steve Bowen Director (Meteorologist) Aon Benfield Analytics Impact Forecasting +1.312.381.5883 steven.bowen@aonbenfield.com Michal Lörinc Catastrophe Analyst Aon Benfield Analytics Impact Forecasting +420.234.618.358 michal.lorinc@aonbenfield.com Anwesha Bhattacharya Senior Analyst Aon Benfield Analytics Impact Forecasting +91.80.6621.8575 anwesha.bhattacharya@aonbenfield.com Global Catastrophe Recap: First Half of 2018 11
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