Natural Catastrophe losses for first half of 2016: Storms in Texas drive losses up
Princeton, NJ – US economic losses caused by natural catastrophes in the first half of 2016 were US$ 17bn (previous year US$ 12bn) of which US$ 11bn (US$ 8bn) were insured. Total worldwide losses during this period were US$ 70bn (of which US$ 27bn were insured). This was significantly higher than the prior year’s first half losses of US$ 59bn, of which US$ 19bn were insured.
With US$ 17bn in total losses from natural catastrophes (US$ 11bn insured), natural catastrophes in the US caused almost a quarter of worldwide economic losses, and accounted for 58% of global insured losses.
Approximately US$ 12.3bn (US$ 8.8bn insured) of this was due to a series of storms in Texas and neighboring states, including destructive hailstorms in Dallas and San Antonio, and severe flooding in the Houston Metropolitan area.
“Homes and businesses incur the brunt of these losses, and property damage from this spring’s thunderstorm season remind us that a roof is a building’s first line of defense against hail and wind events. Proper roof maintenance, roofing materials and installation are all critical to helping reduce these types of losses,” said Tony Kuczinski, President and CEO of Munich Reinsurance America, Inc.
To help homeowners build safer, stronger structures in the face of increasing severe weather events, Munich Re and the Insurance Institute of Business and Home Safety (IBHS) recently launched FORTIFIED Home™ On the Go, an interactive tablet app available for free download from the iTunes Store. It walks homeowners, contractors and architects through the home strengthening process, providing information based on their specific input.
Weather extremes in Texas and other southern states are symptomatic of an El Niño phase, which intensifies the subtropical jet stream, which can cause an increase in severe storms in the region. Further north, El Niño conditions also caused warm and dry conditions in Alaska and western Canada, helping to trigger the worst wildfire in Canadian history. Direct losses from these fires totalled US$ 3.6bn, of which US$ 2.7bn were insured.
One beneficial aspect of El Nino conditions is that it tends to reduce springtime tornadic activity over the southern Great Plains. Although the year’s thunderstorm season got off to an early start, the states of Texas, Oklahoma, and Kansas have all seen about 50% fewer tornadoes this year than in the first half of 2015. By the end of June, the number of observed tornadoes nationally was about 700, significantly below the average of 1,021 for the last ten years.
However, El Nino conditions have now faded, explained Peter Hoeppe, Head of Munich Re's Geo Risks Research Unit. “In the third quarter of 2016, the ENSO climate oscillation is expected to switch to a La Niña phase, which also has a major influence on global weather patterns. For example, La Niña tends to promote the formation of hurricanes in the tropical North Atlantic and a greater number of typhoons in the Philippines.”
The hurricane season in the North Atlantic also started early. In January, Hurricane Alex formed south of the Azores. The storm passed through the Azores at hurricane strength, but with minimal impacts. An additional three tropical storms have formed in the Atlantic so far in 2016, two of which made landfall in the US. However, both storms were relatively weak, causing only minor losses.
First Quarter 2016 Global Natural Catastrophes Highlights
Natural catastrophe figures for the first half of 2016:
- Overall global losses were above the inflation-adjusted average for the last 30 years (US$ 63bn), but below the average for the last 10 years (US$ 92bn).
- Insured losses were in line with the inflation-adjusted average for the last 10 years and above the average for the last 30 years (US$ 15bn).
- 3,800 people lost their lives, significantly fewer than the previous year (21,000) and the averages for the last 10 and 30 years (47,000/28,000).
- The highest losses were caused by two earthquakes on the Japanese island of Kyushu in April (US$ 25bn, of which US$ 6bn was insured).
- Of particular note were a series of storms in the US and Europe, extreme forest fires in Canada, and the complete absence of typhoons in the northwestern Pacific.
Princeton, NJ July 12, 2016
Munich Reinsurance America, Inc.
555 College Road East
Princeton, NJ 08543-5241
Munich Re stands for exceptional solution-based expertise, consistent risk management, financial stability and client proximity. This is how Munich Re creates value for clients, shareholders and staff. In the financial year 2015, the Group – which combines primary insurance and reinsurance under one roof – achieved a profit of €3.1bn on premium income of over €50bn. It operates in all lines of insurance, with more than 43,000 employees throughout the world. With premium income of around €28bn from reinsurance alone, it is one of the world's leading reinsurers. Especially when clients require solutions for complex risks, Munich Re is a much sought-after risk carrier. Munich Re's primary insurance operations are concentrated in the ERGO Group. ERGO is one of the leading insurance groups in Germany and Europe. ERGO is represented in over 30 countries worldwide and offers a comprehensive range of insurances, provision products and services. In 2015, ERGO posted premium income of €17.9bn. In international healthcare business, Munich Re pools its insurance and reinsurance operations, as well as related services, under the Munich Health brand. Munich Re's global investments (excluding insurance-related investments) amounting to €215bn are managed by MEAG, which also makes its competence available to private and institutional investors outside the Group.
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