APAC insured losses in 2018 'not a surprise'

Insured losses from major natural catastrophes in 2018 totalled roughly $71.5 billion, half of what they were in 2017 according to new figures from Willis Re.

The 2018 average was only slightly more than the annual average since 2011, but the third-highest total during the eight-year period, according to the Summary of Natural Catastrophe Events 2018 report, published by Willis Re.

The average is driven upwards by peak annual losses of $120 billion in 2011 and $143 billion in 2017. In contrast to these previous peak years, where one or two natural disasters contributed a large percentage of the total insured loss, no such major event or events account for a large proportion of the 2018 losses. Instead, the total arises from a series of smaller and medium-sized loss events.

The largest single insured loss was the Camp Fire, which will cost re/insurers between $6.0 and $10.75 billion, pushing the likely combined losses from the Carr, Mendocino, Camp, and Woolsey wildfires to about $15-17 billion. The insured loss range for Hurricane Michael is $6.0 to $10.0 billion; Typhoon Jebi in Japan delivered an estimate of $8.5 billion of insured losses. The largest European loss was winter storm Friederike, with insured losses of about $2.0 billion. No single major insured loss from natural disasters occurred in Latin-America or the Caribbean. 

Karl Jones, managing director and head of international catastrophe analytics at Willis Re, said 2018 was an unusual year. “The industry experienced a large number of mid-sized natural catastrophes. Three events – the Camp Fire, Typhoon Jebi, and Hurricane Michael – have all reached at least the high single digit billions in insured losses, but only the Camp Fire seems likely to exceed the level of $10 billion. However, a large number of smaller, billion-dollar losses, principally storms, has added up to make 2018 a costly catastrophe year. With the exception of the major California wildfires, these losses are well within modelled expectations.”

Hui Yen Tai, regional director and head of analytics Asia Pacific at Willis Re, said: “The North-West Pacific Basin, which includes the areas affected by Typhoons Jebi, Trami and Mangkhuk, is the world’s most active tropical cyclone basin. Whilst the 2018 season registered notable insured losses in Asia, neither frequency nor severity is a surprise as they are within modelling and scientific expectations.

”What also draws attention is the continued protection gap and humanitarian crises arising from catastrophe events across many parts of the region, such as the Kerala floods with insured loss at only approximately 10% of the estimated $3 billion economic loss. This is a critical area where the role and value of the re/insurance industry can and should feature more prominently, through proactive collaboration with governments and non-profit organizations who are increasingly active in addressing this concern.”