Friday 17 January 2014

Natural disasters produced $192bn global economic loss in 2013, while insurers face $45bn bill - Impact Forecasting annual catastrophe study

Impact Forecasting, the catastrophe model development center of excellence at Aon Benfield, today releases its Annual Global Climate and Catastrophe Report, which evaluates the impact of the natural disaster events that occurred worldwide during 2013. Aon Benfield is the global reinsurance intermediary and capital advisor of Aon plc (NYSE: AON).

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The report reveals that 296 separate events produced total economic losses of USD192 billion – four percent below the 10-year average of USD200 billion, but above the average 259 events.

The natural disasters caused total insured losses of USD45 billion – their lowest since 2009 and 22 percent below the 10-year average of USD58 billion.

In a reversal from 2012, the largest global events of 2013 were heavily concentrated in Europe and Asia, rather than in the United States. However, despite just 16 percent of all economic losses occurring in the U.S., the country accounted for 45 percent of all insured losses globally due to its greater insurance penetration.

Flood events accounted for 35 percent of all global economic losses during the year, which marked their highest percentage of aggregate losses since 2010. Notable events included major flooding in Central Europe, Indonesia, the Philippines, China, and Australia.

Meanwhile, severe drought conditions contributed to billion-dollar (USD) losses in Brazil, China, New Zealand, and the U.S.

Stephen Mildenhall, Chief Executive Officer of Aon Benfield Analytics, said: "2013 was an active year for serious catastrophe events but one in which the industry dodged the bullet of a single dominating insured event. Typhoon Haiyan, however, demonstrated the real and ever-present potential for large scale destruction. U.S. insured losses, at 45 percent of the total, were in-line with the U.S. 42 percent share of global property premium."

The 2013 report offers a more comprehensive analysis of possible loss trends across four key global regions: United States, Americas (Non-U.S.), EMEA, and APAC.

The study highlights that the most deadly event of 2013 was Super Typhoon Haiyan, which struck the Philippines in November, leaving nearly 8,000 people dead or missing.

The May/June floods in Central Europe were the costliest single event of the year, causing an estimated USD5.3 billion insured loss and approximately USD22 billion in economic losses. Most of the flood losses were sustained in Germany, which also endured record-level insured hail losses during multiple summer convective thunderstorm events.

No hurricanes struck the U.S. during the year, as the country extended its record streak without a major (Category 3+) hurricane landfall to eight consecutive years. The previous record was set between September 1900 and October 1906.

A total of 15 tropical cyclones (Category 1+) made landfall globally in 2013, slightly below the 1980-2012 average of 16. Thirteen of the landfalls were registered in the Northern Hemisphere, including nine in Asia.

Europe, the Middle East and Africa (EMEA) and the Americas (Non-U.S.) each sustained aggregate insured losses above their 10-year averages in 2013. The United States and Asia-Pacific (APAC) regions both incurred below normal insured losses.

Steve Bowen, senior scientist and meteorologist at Impact Forecasting, said: "Despite registering nine separate billion-dollar events, natural disaster losses in the U.S. were down 78 percent from 2012. The most significant losses in 2013 were found in Europe and Asia Pacific, where each region endured multiple events that had major financial and societal implications. While not the costliest event, Super Typhoon Haiyan was the most catastrophic after coming ashore in the Philippines as one of the strongest tropical cyclones ever recorded. Typhoon activity in the Western Pacific also led to Typhoon Fitow becoming the second-costliest insured event in China's history after payouts surpassed USD1.0 billion. An active year in Europe saw economic losses that were the highest since 2002 and 90 percent above its recent ten-year average."

The report also reveals that preliminary data indicates that 2013 was the fourth warmest year recorded since global land and ocean temperature records began in 1880.

Impact Forecasting continues to welcome users to its Catastrophe Insight website, which contains current and historical natural catastrophe data and event analysis and is available at www.aonbenfield.com/catastropheinsight

To view the full Impact Forecasting 2013 Annual Global Climate and Catastrophe Report, please follow the link below:

http://bit.ly/1cV2Ysd

About Aon Benfield
Aon Benfield, a division of Aon plc (NYSE: AON), is the world's leading reinsurance intermediary and full-service capital advisor. We empower our clients to better understand, manage and transfer risk through innovative solutions and personalized access to all forms of global reinsurance capital across treaty, facultative and capital markets. As a trusted advocate, we deliver local reach to the world's markets, an unparalleled investment in innovative analytics, including catastrophe management, actuarial and rating agency advisory. Through our professionals' expertise and experience, we advise clients in making optimal capital choices that will empower results and improve operational effectiveness for their business. With more than 80 offices in 50 countries, our worldwide client base has access to the broadest portfolio of integrated capital solutions and services. To learn how Aon Benfield helps empower results, please visit aonbenfield.com.

About Impact Forecasting® LLC
Impact Forecasting is a catastrophe modeling center of excellence whose seismologists, meteorologists, engineers, mathematicians, finance risk management and insurance professionals analyze the financial implications of natural and man-made catastrophes around the world. Impact Forecasting's experts develop software tools and models that help clients understand risks from hurricanes, tornadoes, earthquakes, wildfires and terrorist attacks on property, casualty and crop insurers and reinsurers. To find out more about Impact Forecasting® LLC, visit www.impactforecasting.com.

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