2014 – A year for the insurance industry to catch its breath
In terms of natural catastrophes, 2014 was a moderate year for the insurance industry. Despite this, it will also go down as a year of records: It was the warmest year since systematic temperature records began. A review of the past year – and a look forward to 2015.
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The following were among the most significant natural catastrophes in 2014:
Snow storms in Japan (February) At over three billion US dollars, these produced one of the costliest catastrophes loss in the history of the Japanese insurance industry. This is an example of a "mass claim", which results from a sizeable accumulation of small and medium claims of between 3,000 and 5,000 US dollars. In meteorological terms, the Japanese weather catastrophe has a complex connection to the exceptionally cold and stormy winter experienced in the USA. The latter event caused an insured loss of 2.3 billion US dollars in December 2013, with the overall loss amounting to approximately four billion US dollars.
Floods in the British Isles (December to February): The winter experienced in the United Kingdom and Ireland was the stormiest for at least 20 years. Between mid-December and mid-February, a total of twelve major winter storms swept across the region The south of England had the wettest January since records began in 1910.
Floods in Southeast Europe (May): The Balkans and neighbouring regions experienced the heaviest rainfall since records began almost 120 years ago. In some areas, rainfall was ten times the monthly average. Flash floods, landslides and river flooding claimed the lives of 86 people and caused economic losses of more than US$ 3bn.
Drought in California (up to the end of October): California suffered its hottest and fourth driest twelve-monthly period since weather records began. Almost 82 percent of the state was affected by extreme or exceptional drought. The drought situation has persisted since 2011, and has prompted the state governor to declare a drought emergency and designate all 58 counties in California a federal natural disaster area.
Cyclone Hudhud in India (October): Cyclone Hudhud hit the east coast of India with wind speeds of between 170 and 215 km/h. Direct losses in India are estimated at seven billion US dollars, of which 530 million US dollars is insured. There was extensive damage, but few fatalities: 700,000 people were brought to safety thanks to warnings issued by the Indian weather service and the now efficiently organised evacuation measures taken by the government.
Earthquake in the Napa Valley (August): After more than two decades of unusual seismic calm in the San Francisco region, the Napa quake of 2014 was the most serious event since the Loma-Prieta quake in 1989. It should be seen as an urgent wake-up call: California, and the San Francisco region in particular, should prepare themselves for bigger tremors.
Overview of natural catastrophes in 2014
2014 was moderate – so what does this mean for the next few years?
"In terms of natural catastrophes, 2014 was indeed a year where the insurance industry could catch its breath," says Dr. Torsten Jeworrek, member of the Munich Re Board of Management and Chairman of the Reinsurance Committee. However, seen from a long-term perspective, there are no indications of any interruption in the rising trend in losses from natural catastrophes. A look at the long-term development reveals the following: Even after adjustment for inflation, there has been a substantial upward trend in the figures for both economic and insured losses since 1980. On top of this: 2014 was the warmest year since record keeping began in 1880 (source: US weather service NOAA – National Oceanic and Atmospheric Administration). According to assessments by the Intergovernmental Panel on Climate Change (IPCC), the ongoing rise in temperature is exacerbating the hazard situation in many regions. The IPCC expects the incidence of weather extremes like hot spells, droughts and heavy rainfall will increase in many regions.
The events from 2014 – summarised in Topics Geo Natural Catastrophes 2014
In the magazine Topics Geo Natural Catastrophes 2014, which is available from 3 March 2015 (either as a print version or as a download), Munich-Re experts report in detail on the significant natural catastrophes during the year and on current nat cat developments. Articles include a report by Dr. Eberhard Faust, a leading expert on natural hazards, on a recent phenomenon: the more frequent occurrence of what are known as "persistent weather patterns". Extreme weather patterns like these can often persist for weeks at a time. New research results suggest that they are connected with extreme weather events and that their increase has to do with the warming of higher latitudes due to climate change. Another article focuses on tornados in the USA. New research results show that, while tornadoes in the region occur on fewer days, there are now more frequent major outbreaks featuring large numbers of twisters at the same time. A further feature looks at the current El Niño phase, which began in 2014 at a later date and in a weaker form than originally forecast. And finally, Munich Re Topics Geo '14 presents an important development that is opening up completely new opportunities for crisis and catastrophe management: the staggering rise in the use of social media. When natural catastrophes strike, these new mass media can be used to obtain reliable information quickly and simply. They are set to become an important source of information for aid organisations, public authorities, the media and the insurance industry.