The insurance industry will pay record claims of US$135 billion from last year’s spate of natural catastrophes, according to a report published by Munich Re.

Further, Hurricanes Harvey, Irma and Maria (HIM), the Mexico earthquakes and wildfires in California created overall economic losses (which include uninsured losses), of US$330 billion, said Munich Re in an overview of natural catastrophes in 2017.

Munich Re said this is the second-highest figure ever recorded for natural disasters, which was only surpassed in 2011, when the Tohoku earthquake in Japan and floods in Thailand contributed to overall losses of US$354 billion in today’s dollars.

The overall loss figure of US$330 billion, for all types of natural disasters, was almost double the 10-year, inflation-adjusted average of US$170 billion, said Munich Re, noting that insured losses were almost three times higher than the average of US$49 billion.

For its report, Munich Re tracked a total of 710 natural catastrophes, which was significantly higher than the average of 605.

The U.S. share of losses in 2017 was even larger than usual: 50 percent, compared to the long-term average of 32 percent. When considering North America as a whole, the share rises to 83 percent, Munich Re noted.

Pattern of Extreme Weather Expected

“…[S]ome of the catastrophic events, such as the series of three extremely damaging hurricanes, or the very severe flooding in South Asia after extraordinarily heavy monsoon rains, are giving us a foretaste of what is to come,” said Torsten Jeworrek, Munich Re board member responsible for global reinsurance business. “Because even though individual events cannot be directly traced to climate change, our experts expect such extreme weather to occur more often in future.”

Abundance of Capital

While the reinsurance industry had hoped the relentless soft market would be alleviated by last year’s expensive catastrophes, rate increases were relatively measured during the January renewals — mostly as a result of the abundance of reinsurance capacity provided by capital market investors backing insurance linked securities (ILS).

This fact was highlighted in two additional reports that were published this week by Willis Re and JLT Re. (Editor’s note: Insurance Journal briefly covered these reports on Jan. 2).

In Willis Re’s renewal report, titled “Willis Re 1st View – January 1, 2018,” James Kent, global CEO Willis Re, confirmed that last year’s catastrophe losses stopped a further decline in risk-adjusted rates in most markets and classes.

However, the continued supply of capital has prevented “widespread increases in risk-adjusted rates particularly on loss free portfolios,” he said

The good news is that there has been a general stabilization of rating levels across a wide range of classes — not just property catastrophe — as well as pricing improvement on some primary classes of business, added Kent. He noted that this provides a better trading environment for reinsurers heading into 2018 than was the case before the catastrophe events.

A renewal report from JLT Re also highlighted the effects of plentiful levels of capacity on the January renewals.

David Flandro, global head of Analytics, JLT Re, said: Pricing pressures were offset by capital deployments after HIM “through channels such as new collateralized vehicles, post-event funds, new catastrophe bond issuances and increased stamp capacity and pre-emptions. Investors responded to opportunities in both the reinsurance and retrocession markets, resulting in the replenishment of a significant portion of lost capacity in time for renewals.”

Ed Hochberg, chief executive officer, JLT Re in North America, noted that in the U.S., rates renewed flat to up 5 percent for loss-free programs and up 10 percent to 20 percent for loss-affected business.

“Flat to moderately up renewals were typical for international property-catastrophe business, reflecting more benign loss activity in Europe and Asia. Even with these increases, the cost of property protection remains competitive with global property-catastrophe pricing approximately 30 percent below 2013 levels,” he said.

Willis Re noted that property reinsurance rates rose 20-40 percent in loss-affected areas in the Caribbean and 5-10 percent in catastrophe hit areas in the United States and Latin America.

On the other hand, despite Canadian property reinsurers’ expected combined ratios of below 90 percent, there was still pressure on global property catastrophe renewal capacity — driven by HIM — and “continued consideration toward (reinsurance) losses emanating from the 2016 Ft. McMurray wildfires,” which resulted in risk-adjusted rate increases of 10 to 30 percent for a number of buyers, said Willis Re.

Related:

Property Reinsurance Rates Rise Less Than Expected in Jan. 1 Renewals</s>A devastating trio of hurricanes left the global insurance industry footing a record bill of 135 billion US dollars (£99.6 billion) last year, according to Munich Re.

A devastating trio of hurricanes left the global insurance industry footing a record bill of 135 billion US dollars (£99.6 billion) last year, according to Munich Re.

Hurricanes Harvey, Irma and Maria, coupled with a powerful earthquake in Mexico, caused more than 10,000 people to lose their lives and insurance costs to hit an all-time high in 2017, the German reinsurer said.

Taking uninsured losses into account, the overall number soared to an even greater 330 billion US dollars (£243 billion) over the period. That amount was only topped by the 354 billion US dollars (£261 billion) worth of losses recorded in 2011 when the Tohoku earthquake and tsunami wreaked havoc on Japan.

Torsten Jeworrek, Munich Re board member, said: “This year’s extreme natural catastrophes show how important insurance is in absorbing financial losses in the wake of such disasters. “For me, a key point is that some of the catastrophic events, such as the series of three extremely damaging hurricanes, or the very severe flooding in South Asia after extraordinarily heavy monsoon rains, are giving us a foretaste of what is to come.

“Because even though individual events cannot be directly traced to climate change, our experts expect such extreme weather to occur more often in future.” Munich Re, which employs around 43,000 people worldwide, said its statistics pinpointed 710 natural disasters throughout 2017, up from an average rate of 605.

It said the US took an even greater share of the losses at 50%, compared with previous levels of around 32%, while European farmers endured a hefty hit after an unexpected temperature drop in April took its toll on crops.</s>NEW YORK (NYTIMES) - Insurers are set to pay out a record US$135 billion (S$179.4 billion) to cover losses from natural disasters in 2017, the world's largest reinsurer said on Thursday (Jan 4), driven by the costliest hurricane season ever in the United States and widespread flooding in South Asia.

Overall losses, including uninsured damage, came to US$330 billion, according to the reinsurer, Munich Re of Germany. That tally was second only to 2011, when an earthquake and tsunami in Japan contributed to losses of US$354 billion at today's dollars.

Insured losses from weather-related disasters were at a high, making up most of the US$135 billion. Munich Re executives warned that losses would continue to escalate.

"Some of the catastrophic events, such as the series of three extremely damaging hurricanes, or the very severe flooding in South Asia after extraordinarily heavy monsoon rains, are giving us a foretaste of what is to come," Torsten Jeworrek, a Munich Re board member, said in a statement.

While it was still difficult to attribute individual weather events to climate change, he said, "our experts expect such extreme weather to occur more often". The United States made up an unusually high share of global insured losses last year - about 50 per cent, compared with just over 30 per cent on average.

Hurricane Harvey, which made landfall in Texas in August, was the most costly natural disaster of 2017, causing losses of US$85 billion. Together with Hurricanes Irma and Maria, the 2017 hurricane season caused the most damage ever, with losses reaching US$215 billion.

But that wasn't all. The devastating wildfire season in California drove insured losses to around US$8 billion. And at least five severe thunderstorms across the country, accompanied by tornadoes and hail, caused insured losses of more than US$1 billion each.

Mark Bove, a senior research meteorologist at Munich Re, said in an interview that losses jumped in the United States because so many of the disasters hit highly populated areas: the Houston bay area, South Florida, Puerto Rico. That was a trend he expected to continue.

People are moving to warmer climates, putting them in the path of hurricanes, and more people are affected by California's fires, he said. "And we don't build buildings to withstand the weather we see today, let alone what we might see as the climate changes in the next 10 to 20 years," he said.

In Asia, heavy monsoon rains that lasted about four weeks longer than usual killed 2,700 people and caused US$3.5 billion in total losses. The Terai lowlands in Nepal, home to almost half the Nepalese population, were most severely hit.

In Europe, unusually low temperatures in April caused billions of dollars in damage to farmers, shrinking some harvests by 50 per cent. The damage was especially costly because crops had already grown robustly in an otherwise warm spring.

Similar volatile weather patters are set to become more frequent as the climate changes, Munich Re said in its news release.

"Plants in certain regions are beginning to sprout earlier in spring, while the threat of frost often does not diminish to the same extent, so that the risk actually increases," it said.</s>The world’s insurers have had to pay out a record amount due to last year’s natural disasters, according to research from the world’s biggest reinsurance company, Munich Re.

The insurance bill for 2017’s natural catastrophes, including the hurricane trio of Harvey, Irma, and Maria and a severe earthquake in Mexico, is expected to come to $135bn – higher than ever before.

And overall losses – which includes uninsured losses – amounted to $330bn from 710 natural catastrophes, the second-highest figure ever recorded, the German insurer found in its annual review of natural disasters.

The yearly average for global natural disasters is 605. Around 10,000 people lost their lives in natural disasters in 2017, slightly higher than in 2016 but much lower than the ten-year average of 60,000.

The only costlier year so far was 2011, when the Tohoku earthquake in Japan contributed to overall losses of $354bn in today’s dollars.

The costs are almost three times above the ten-year average of $49bn and eight percent higher than the previous records seen in 2005 and 2011.

Torsten Jeworrek, Munich Re Board member responsible for the firms reinsurance business, said:

This year’s extreme natural catastrophes show how important insurance is in absorbing financial losses in the wake of such disasters. For me, a key point is that some of the catastrophic events, such as the series of three extremely damaging hurricanes, or the very severe flooding in South Asia after extraordinarily heavy monsoon rains, are giving us a foretaste of what is to come. Because even though individual events cannot be directly traced to climate change, our experts expect such extreme weather to occur more often in future.

In the US — 2017 hurricanes

The US took the lions share of losses, at 50 percent, much higher than the long-term average of 32 percent of losses, driven by hurricanes Harvey, Irma and Maria.

Hurricane Harvey is estimated to be the largest economic loss of the year, at $85bn. Hurricane Irma though was the biggest driver of insured losses, at $32bn.

The California wildfires though are only estimated as an $8bn insurance and reinsurance industry loss which is lower than many in the industry had been anticipating.

However it is a largely insured loss, with the economic figure only slightly higher at $10.5bn.

In late August, Hurricane Harvey made landfall in Texas as a Category 4 storm. After landfall, the storm stalled over the state for several days and was able to continue to tap moisture from the very warm Gulf of Mexico.

This resulted in torrential rainfall of such magnitude over the city of Houston that, based on long-term statistics, should occur less than once in a thousand years.

A short time later, Hurricane Irma, a Category 5 storm (the highest category, featuring winds over 300km/h), blew a swath of destruction through the Caribbean before crossing the Florida Keys on 10 September and making landfall on the southwest coast of Florida.

Considering the wind speeds, losses in Florida remained comparatively moderate. But, given her larger share of insured storm damage, Hurricane Irma nevertheless ended up being the costliest natural disaster for insurers in 2017, with insured losses of around $32bn.

Hurricane Maria caused extreme damage to the islands of the Caribbean.

For example, on Puerto Rico, many production facilities, including those used to manufacture pharmaceuticals, were affected.

Infrastructure on the island, a territory of the US, was almost totally crippled; six weeks after the storm, three-quarters of households were still without power.

A series of severe thunderstorms in the spring, with accompanying tornadoes and hail, also contributed to the heavy US losses. No less than five tornado-hail outbreaks caused insured losses in excess of $1bn each.

Paradoxically, last winter’s heavy snow and rainfall in California actually fuelled this year’s devastating brushfire season. This is because, after a long drought, the precipitation had caused many plants to sprout and grow again.

The summer heat turned this increased vegetation into a veritable matchbox, leading to severe brush fires that lasted well into December.

Due to the high insurance density in some impacted suburbs, overall losses for the October fires alone were $10.5bn, and insured losses are expected to be around $8bn.

Unusually low temperatures in April caused billions in damage to European farmers since their crops had already grown robustly in an otherwise warm spring.

Depending on the region and particular fruit, harvests were up to 50 percent smaller than usual.

Another apparent paradox is that such events may start to occur more frequently in the future as a result of climate change: plants in certain regions are beginning to sprout earlier in spring, while the threat of frost often does not diminish to the same extent, so that the risk actually increases.

Losses caused by the late frost amounted to US$ 3.6bn (€3.3bn), of which only $650m was insured, given the low insurance penetration in the agricultural sector.

Some 2,700 people lost their lives following an extremely severe monsoon in South Asia.

The annual monsoon season, which brings the otherwise desperately needed rain, lasted about four weeks longer than normal in 2017.

The regions most severely affected this time were the Terai lowlands in Nepal, where almost half of the Nepalese live, as well as certain Indian provinces along the Himalayas. In some districts, three-quarters of the territory was under water.

The fact that only a small fraction of the US$ 3.5bn in total losses was insured contributed to the humanitarian catastrophe.

Is climate change to blame for the record insurance losses?

Governments around the world are working to tackle climate change, with the US withdrawal from the Paris climate accords spurring others on to do more to try to limit emissions.

US president Donald Trump has sought to undermine the importance of climate change, which is thought to appeal to his conservative base in the US.

Despite this the Trump administration released a report in November last year that warned “extreme climate events” like heavy rainfall, heatwaves, wildfires, and rising sea-levels get more severe and potentially result in abrupt, irreversible climate changes.

However, assessing whether climate change is directly responsible for individual events is difficult.

The Bulletin of the American Meteorological Society has begun issuing a special report each year assessing the impact of climate change on the previous year’s extreme events, according to a recent report in Scientific American.

Meanwhile, the intensity, frequency and duration of North Atlantic hurricanes have increased since the early 1980s, according to the most recent National Climate Assessment.</s>Insurers are set to pay out a record $135 billion to cover losses from natural disasters in 2017, the world’s largest reinsurer said Thursday, driven by the costliest hurricane season ever in the United States and widespread flooding in South Asia.

Overall losses, including uninsured damage, came to $330 billion, according to the reinsurer, Munich Re of Germany. That tally was second only to 2011, when an earthquake and tsunami in Japan contributed to losses of $354 billion at today’s dollars.

Insured losses from weather-related disasters were at a high, making up most of the $135 billion. Munich Re executives warned that losses would continue to escalate.

“Some of the catastrophic events, such as the series of three extremely damaging hurricanes, or the very severe flooding in South Asia after extraordinarily heavy monsoon rains, are giving us a foretaste of what is to come,” Torsten Jeworrek, a Munich Re board member, said in a statement.

While it was still difficult to attribute individual weather events to climate change, he said, “our experts expect such extreme weather to occur more often.”

The United States made up an unusually high share of global insured losses last year — about 50 percent, compared with just over 30 percent on average.</s>Financial pain inflicted by natural disasters worldwide almost doubled in 2017, German reinsurance giant Munich Re said on Thursday, with a new record in losses from weather-related catastrophes.

The year saw the worst hurricane season on record and major monsoon flooding, the company said, warning that as climate change intensifies it expects "extreme weather to occur more often in the future".

Losses in 2017 amounted to some USD 330 billion for all types of natural disaster globally, the financial firm said, close to double the USD 175 billion in mayhem inflicted the previous year.

The financial losses figure was the second-highest on record after 2011, and almost twice its 10-year average of USD 170 billion.

But casualty figures did not rise in step with property damage, as around 10,000 people lost their lives — around 30 percent more than the previous year's toll.

That was a fraction of the 10-year average of 60,000 killed annually in catastrophes.

Some 2,700 people died in severe monsoons in South Asia, with Nepal and Himalayan regions of India among the worst affected.

Meanwhile, some 50 percent of the global financial pain fell on the United States, with regions like Texas and Puerto Rico pummelled by hurricanes Harvey, Irma and Maria, and wildfires raging in California.

When taking into account the cash toll exacted from the rest of North America — including Mexico, where devastating earthquakes claimed 369 lives — the continent suffered 83 percent of worldwide financial losses.

Munich Re labelled 2017 as "the costliest hurricane season on record", with some USD 215 billion of damage from a series of storms.

The havoc was "a foretaste of what is to come," said board member Torsten Jeworrek.

"Even though individual events cannot be directly traced to climate change, our experts expect such extreme weather to occur more often in the future."

The insurers also pointed to a weak harvest in Europe, where farmers lost up to 50 percent of their crops after an April frost damaged plants that had flourished in a warm spring, as a hint of the risks as climate change progresses.

Only 41 percent of the losses recorded in 2017 were insured, Munich Re said, suggesting that low levels of coverage in South Asia in particular "contributed to the humanitarian catastrophe" of the monsoon.</s>Want the latest climate news in your inbox? You can sign up here to receive Climate Fwd:, our new email newsletter.

Insurers are set to pay out a record $135 billion to cover losses from natural disasters in 2017, the world’s largest reinsurer said Thursday, driven by the costliest hurricane season ever in the United States and widespread flooding in South Asia.

Overall losses, including uninsured damage, came to $330 billion, according to the reinsurer, Munich Re of Germany. That tally was second only to 2011, when an earthquake and tsunami in Japan contributed to losses of $354 billion at today’s dollars.

Insured losses from weather-related disasters were at a new high, making up most of the $135 billion. Munich Re executives warned that losses would continue to escalate.

“Some of the catastrophic events, such as the series of three extremely damaging hurricanes, or the very severe flooding in South Asia after extraordinarily heavy monsoon rains, are giving us a foretaste of what is to come,” Torsten Jeworrek, a Munich Re board member, said in a statement.

While it was still difficult to attribute individual weather events to climate change, he said, “our experts expect such extreme weather to occur more often” in the future.</s>FRANKFURT/MUNICH (Reuters) - Insurers will have to pay claims of around $135 billion (£99.63 billion) for 2017, the most ever, following a spate of hurricanes, earthquakes and fires in North America, according to a report published on Thursday.

German reinsurer Munich Re (MUVGn.DE), in its annual natural catastrophe review, also said last year’s total losses, including those not insured, were $330 billion, the second-worst in history after 2011 when an earthquake and tsunami wreaked havoc in Japan.

Although individual events could not be linked directly to climate change, global warming is playing a role, Munich Re said. It expected more frequent extreme events in future.

“We have a new normal,” said Ernst Rauch, head of Munich Re’s Corporate Climate Centre, which monitors climate change risks.

“2017 was not an outlier,” he said, noting insured losses have surpassed $100 billion multiple times since 2005. “We must have on our radar the trend of new magnitudes.”

Last year’s hurricanes Harvey, Irma and Maria in the United States and Caribbean, wildfires in California and earthquakes in Mexico destroyed homes, infrastructure and numerous lives.

The disasters also rocked global insurers. Munich Re and Hannover Re (HNRGn.DE) both issued profit warnings.

That dealt a blow to a sector already struggling with thin margins, stiff competition and falling prices.

Munich Re’s tally for the industry comes on the back of other estimates that underscored the severity of 2017.

In December, Swiss Re (SRENH.S) estimated global insured losses from catastrophes would hit $136 billion in 2017, the third-highest on record for the sector, with the United States hardest hit. That figure is not directly comparable to Munich Re’s estimates as it includes man-made disasters.

Reinsurers, which are in the business of insuring insurance, are experts in managing risk and rarely get caught off guard. Analysts have said reinsurers may need to take a fresh look at their risk models as the planet warms and storms become more intense.

A big question for the industry has been whether the run of catastrophes would allow them to achieve higher prices for their coverage, which have been in decline for years.

Early indications suggest modest increases. Global property reinsurance prices rose less than expected in the key Jan. 1 renewal season, with strong competition limiting increases to single digit percentages, brokers said this week.

A turnaround in prices would be the first major reversal since Hurricane Katrina in 2005.</s>Disasters hit the insurance industry for a record £100billion last year – and there could be worse to come.

Three Atlantic hurricanes, an earthquake in Mexico and floods in Asia were the main culprits behind soaring bills, says reinsurer Munich Re.

Damages for the year were almost three times the average £36billion for the past decade, and 8 per cent higher than previous records in 2005 and 2011.

A total of 710 catastrophes killed about 10,000 people, slightly more than a year earlier.

Total losses, including those which were uninsured, hit £229billion, the second-highest ever and almost double the average.

Munich Re warned climate change could mean worse damage in future.

Board member Torsten Jeworrek said: ‘Even though individual events cannot be directly traced to climate change, our experts expect such extreme weather to occur more often in future.’</s>Insurers will have to pay claims of around $135 billion for 2017, the most ever, following a spate of hurricanes, earthquakes and fires in North America, according to a closely watched report published on Thursday.

The German reinsurer Munich Re, in its annual natural catastrophe review, also said that last year's total losses, including those not insured, were $330 billion, the second-worst in history after 2011 when an earthquake and tsunami wreaked havoc in Japan.

Although individual events could not be linked directly to climate change, global warming is playing a role. Munich Re said it expected more frequent extreme events in the future.

"We have a new normal," said Ernst Rauch, head of Munich Re's Corporate Climate Centre, which monitors climate change risks.

"2017 was not an outlier," he said, noting that insured losses surpassed $100 billion multiple times since 2005. "We must have on our radar the trend of new magnitudes."
Munich Re reports that the insurance industry faces record claims of US$135 billion from natural catastrophes, such as the Mexico earthquakes, South Asian floods, California wildfires and Atlantic hurricanes in 2017. Overall economic losses from natural disasters are estimated at the second highest amount since 2011.