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Natural Disasters

Quiet after the storm – significant relief with losses from natural disasters in the first half of 2018

Following the extremely high losses from natural catastrophes in 2017, stemming chiefly from a destructive autumn hurricane season in the Atlantic, the first half of 2018 has seen very moderate losses.

The overall loss amount from windstorms, earthquakes, severe weather and other natural disasters in the first six months came to US$ 33bn. Some US$ 17bn – just over half of the claims burden – was insured. This puts the overall losses well above the average values for the last 10 and 30 years (US$ 104bn and US$ 68bn respectively). Insured losses matched the low level of the last 30 years.

The absence, by and large, of major disasters and supercatastrophes worldwide also kept the number of registered fatalities at a low level. Regrettably, a total of 3,000 people nevertheless lost their lives in natural disasters between January and June 2018.

Quiet after the storm - Natural disasters caused lower losses than usual in the first half of 2018

Losses from natural disasters are below average

There were six large-scale thunderstorms, each of which caused billions of dollars in losses. Overall losses from severe thunderstorms in the USA in the first half of the year came to US$ 18.5bn, well below the average. US$ 13.5bn of this was insured. This marks the eighth time in the space of just ten years that insured losses from thunderstorms in the USA have exceeded the US$ 10bn mark. Thunderstorm losses were also the third highest ever in the USA for the period January to June.

During the first quarter in particular, unusual atmospheric conditions provided the perfect environment for the development of supercell thunderstorms. These invariably produce major hailstorms and tornadoes. In several instances, the loss drivers were hailstorms with hailstones as big as 11 cm.

There was also the fact that, this year, the tornado season began early and with a bang: the number of tornadoes observed in the first quarter of 2017 was twice as high as the average for the years 2005–2015, although tornado activity eased somewhat thereafter. The number of sighted tornadoes up to the end of June (over 1,100) was still higher than the average for this period (1,000).

Winter Storm Friederike in Europe was the costliest natural catastrophe in the first half of 2018

The last time that overall losses were lower than this year's figure was in 2005 (US$ 29bn). However, losses in the second half of that year climbed to a record level, primarily from Hurricanes Katrina, Rita and Wilma. After adjustment for inflation, this remains the third costliest year on record in terms of overall losses (approximately US$ 280bn).

The Munich Re NatCatSERVICE registered approximately 430 relevant natural disasters in the first half of 2018. All loss events are recorded that have resulted in property damage and/or involved fatalities. Different threshold values are used for property losses according to a country’s level of development. The distribution of overall losses in the first half of the year to the principal peril groups of geophysical, meteorological, hydrological and climatological events showed that almost twice as many meteorological events occurred worldwide in the first six months than in the time series 1980–2017. This represented the biggest change, with this year's figure of 76% contrasting with the long-term statistic of 44%. However, the other perils have substantially reduced. Geophysical events, such as earthquakes or volcanic eruptions, accounted for just 5% of overall losses, floods for 10%, and climatological events, such as heat waves, for 8%. The costliest events overall were winter storms and severe weather in Europe and the USA.

In terms of the distribution of the US$ 17bn in insured losses to the individual peril groups, the main culprit remained meteorological events, which accounted for 86% of the total, slightly higher than the 72% figure for the statistical series since 1980. Here, too, the costliest events occurred in Europe and the USA.

Several storms in the USA caused losses in the billions in the first half of 2018

Number of events

The first six months of 2018 were characterised by a relatively large number of small events, with the distribution per continent very similar to the long-term average, the most notable concentration being in Asia, which accounted for 39%. As with overall losses, storm events were the largest category (50%) in the distribution by type of event. This represents a significant deviation from the 39% in the long-term statistical series since 1980.

Fatalities

Total fatalities in the first half of the year came to approximately 3,000, one of the lowest victim statistics ever recorded in the database. The only years with fewer aggregate fatalities than 3,000 were 2014 and 1986. Roughly half of the victims were killed in meteorological events, 32% in floods and 8% in climatological events. Special mention should be made of severe weather events in India and Nepal with a total of 270 victims, and also floods in Kenya that claimed the lives of over 100 people. According to provisional estimates, 113 people died after the eruption of the volcano Fuego in Guatemala, while the cold snap in Europe at the end of February/start of March claimed around 80 victims.

Continents

North America (including the Caribbean and Central America)
Winter storms and severe weather events, in particular in the USA and Canada, were the principal causes of losses that amounted to billions of dollars. At the beginning of March, a nor'easter, as this type of winter storm is called, caused overall losses of US$ 2.2bn, of which US$ 1.6bn was insured. Severe weather losses in the first half of the year came to US$ 10.4bn, of which US$ 7.5bn was insured. The volcanic eruptions on Hawaii and in Guatemala also attracted considerable attention, as well as causing substantial damage. Loss estimates for these events are still incomplete.

South America
A total of 32 events were registered in South America. Minor earthquakes occurred in Peru, Ecuador and Columbia, along with a variety of severe weather events that were followed by flash floods and landslides. These events claimed the lives of 77 people.

Europe
The costliest event, Winter Storm Friederike, struck Europe in January, causing overall losses of US$ 2.7bn (€2.2bn) and insured losses of US$ 2.1bn (€1.7bn). Losses were recorded in Germany, the Netherlands, Belgium, the United Kingdom and Poland. A short time before, at the start of January, Winter Storm Eleanor (known in Germany as Burglind) had caused losses of US$ 1.2bn (€960m), of which US$ 900m (€720m) was insured.

Africa
Between March and May, extensive rainfall in Kenya led to devastating floods in which more than 100 people were killed. Losses went well into the millions, and more than 100,000 people had to be brought to safety. No less than four tropical storms made landfall on the African continent: in May, Cyclone Sagar in East Africa, Cyclones Ava and Eliakim on Madagascar, and Cyclone Berguitta on the islands of Mauritius and Réunion.

Asia
The costliest events of the first half of the year mainly affected China. Winter losses from extreme weather in January and April, featuring long periods of frost and heavy snowfalls, came to around US$ 2bn. In late May, Cyclone Mekunu struck Yemen and Oman causing widespread devastation. The loss estimate is still incomplete, but is likely to be in the high hundreds of millions (??). Significant insured losses may also be expected in this instance. An earthquake struck Osaka, Japan, on 18 June, causing damage to several thousand houses and infrastructure facilities. Here too, loss estimates are not yet complete.

Australia and Oceania
This continent was also struck by a series of earthquakes. In the spring, Indonesia and Papua New Guinea were hit by several tremors. Almost 100 people lost their lives and overall losses came to around US$ 300m. Cyclone Gita made landfall in February, causing overall losses of US$ 230m in Tonga, Samoa, American Samoa, Fiji and New Zealand, of which some US$ 25m was insured. In March, drought, low humidity, high temperatures and high wind speeds helped spread extensive bushfires in New South Wales, Australia. Almost 100 houses and buildings were damaged or destroyed by the flames. Overall losses are likely to be in excess of US$ 100m, the bulk of which is insured.

Further Information
Munich Re Experts
Petra Löw
Head of NatCatSERVICE
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