Re/insurers pay $30bn+ for natural catastrophe losses in H1 2020

Global insured natural catastrophe losses rose to over $30 billion for the first-half of the year, as the insurance, reinsurance and insurance-linked securities (ILS) market supported roughly 40% of the estimated $75 billion of economic losses driven by events around the world in H1 2020, according to Aon.

The $30 billion plus insured loss estimate for natural catastrophes in H1 is around 5% above the long-term average of $28 billion, insurance and reinsurance broking group Aon said today.

While the economic loss figure, at $75 billion, is actually around 25% lower than the 2000-2019 average of $98 billion, according to the brokerage group.

All these numbers are preliminary and with the first-half only just over are certain to rise, as catastrophe loss claims continue to develop.

Natural disasters drove an estimated 2,200 deaths in the first-half of the year, which is a long way below the the long-term (1980-2019) average of 39,800 and the median of 7,700.

These figures, of a lower then average economic impact and fatalities, with a higher than average insured loss, are perhaps reflective of more of the costly catastrophe loss activity being concentrated in advanced economies in this first-half, as well as of fewer very large events occurring.

In total, there were 207 global natural disaster events recorded by Aon’s Impact Forecasting division for H1 2020.

Frequency was therefore above the 20-year average of 184 and the median of 189.

At least 20 separate billion-dollar economic events occurred during the first half of 2020, with the United States leading the way with 10 events; Asia Pacific (APAC) with five events; Europe, Middle East and Africa (EMEA) with three events, and the Americas with two events.

Steve Bowen, director and meteorologist on the Impact Forecasting team at Aon’s Reinsurance Solutions business, commented, “The first half of 2020 was challenging on a number of fronts given the ongoing effects of COVID-19 and a series of impactful weather and climate-related events around the world. Much of the natural disaster impact came via the severe convective storm peril.

“A record 10 individual thunderstorm-related events had more than USD1 billion in economic losses in the United States alone during the first six months of the year; while Australia and Canada each dealt with severe hailstorms that prompted billion-dollar damage bills. Early season tropical cyclones such as Amphan in India and Bangladesh, wildfires in Australia, windstorms in Europe, and record-setting heat in the Arctic Circle were also notable in the first half of the year.

“While first-half losses do not show a direct correlation to the second half of the year, the looming peak of Atlantic Hurricane Season as La Niña conditions are anticipated to arrive, only enhances the need to be mindful of natural hazard risk in the months to come.”

Cyclone Amphan, which killed 133 people in India in May, is estimated to have been the costliest economic loss event of H1 2020, causing an estimated $15 billion in direct damages.

Meanwhile, a severe weather event in the United States from April 10-14, killing 38 people, was the costliest insured event, with claims totalling nearly $3 billion, Aon said.

Numerous smaller- and medium-scale disasters, which impacted a large number of communities globally, characterised the period, while from a peril perspective, there was an unusually low number of significant earthquakes in the first-half, Aon further explained.