Weather and Insurance: Recent Disaster To Cost $95B
Weather and Insurance
Swiss Re, one of the world’s largest re-insurers, estimates that recent weather incidents will cost the industry $95 billion. This includes Hurricanes Harvey, Irma, and Maria as well as two recent earthquakes in Mexico. The Zurich-based company provides backup policies to companies that write primary insurance policies. They say the claims process is ongoing and estimates could continue to grow.
The National Oceanic and Atmospheric (NOAA) National Centers for Environmental Information (NCEI) tracks U.S. weather and climate events that have great economic and societal impacts. Since 1980, an impressive 212 weather and climate disasters have impacted the U.S. The cumulative costs for these events exceed a whopping $1.1 trillion.
Hurricane Harvey was America’s 10th billion-dollar natural disaster in 2017. NOAA currently describes 2017’s disasters as a “rapid succession of disaster events.” Deke Arndt, chief of the climate monitoring brand of NOAA National Climate Data center reports “The trend in these disasters is clearly up and that reflects more extreme weather events, including more ‘big rain’ events.” These events show up as flooding and also reflect where people live and how valuable their assets are.”
According to NOAA, 2017’s 15 weather disasters include:
- 1 drought event
- 2 flooding events
- 1 freeze event
- 7 severe storm events
- 3 tropical cyclone events
- 1 wildfire event
Overall, these events caused the deaths of 282 people as of October 2017. To put this in context, the 1980 to 2016 annual aver is 5.5 events. However, the annual average for 2012 to 2016 is 10.6 events.
2016 Historic Billion-Dollar Weather Disasters
While 2017 has been difficult for weather and insurance so far, 2016 was historically bad. This unusual year sustained 15 weather and climate events with losses exceeding $1 billion in the U.S. These events include disasters like:
- Inland flooding
- Severe storms
- Tropical cyclones
While we tend to think of these from an insurance perspective in money lost, these disasters were also deadly. In 2016, 138 people in the U.S. alone died because of weather and climate disasters. These events cost $46 billion. 2016 was the second highest annual number of U.S. billion-dollar disasters behind 2011.
Worldwide, these numbers are much larger.
Re-insurers Doing Research
Munich Re, another leading global reinsurance company, has been conducting research for more than 40 years on natural hazards and the loses they cause. They even have their own database that documents loses due to natural hazards back to 1950. They classify events into geophysical, meteorological, hydrological, and climatologist families.
Geophysical events include earthquakes, tsunamis, volcanic eruptions, and mass movements like landslides. Meteorological events encompass storms. Weather conditions like lightning, cyclones, winter storms, and tornadoes are included in this family. The next family, hydrological, includes floods and wet mass movements, like an avalanche. Lastly, climatological events include extreme temperature, drought, and wildfires.
As you can see from the above infographic, meteorological events make up a lot of the natural disasters. From the years 1980 to 2014, the group with the largest economic loss are storms (40%). The second largest group are floods (25%). This make sense, since storms are the most frequent event (45% of all events). According to Munich Re, storms have contributed to 71% if all insured losses.
Earth Networks weather data helps forecast and mitigate risks in all four of these families. Our weather visualization software, historical weather data, and team of expert meteorologists combine to create customized solutions for businesses and governments around the world. Understanding current hyperlocal weather conditions in real-time helps our meteorologists assess and mitigate risks for hurricanes, dangerous cloud-to-ground lightning strikes, storm surge, and even wildfires.
Weather and insurance can be a pretty expense duo. However, as with any weather event, preparation is key. To learn more about how your organization can mitigate financial risk, please contact us today.