US thunderstorms dominate $27bn H1 insured disaster losses: Munich Re

Severe thunderstorms, or convective weather, in the United States has dominated insured natural disaster losses for the first-half of 2020, according to reinsurance firm Munich Re.

The company said that severe thunderstorms, tornadoes, hail storms and flash floods, all parts of the convective weather bucket, saw 8 billion dollar insured loss events in the first-half of this year.

In fact, the U.S. severe convective weather accounted for some $20 billion out of the global total $27 billion that was covered by insurance and reinsurance.

Torsten Jeworrek, Member of the Board of Management responsible for reinsurance at Munich Re explained, “The natural disaster statistics for the first half of 2020 point to two things in particular: One: severe thunderstorms in North America dominate the loss figures; this demonstrates the need to strengthen building resilience to mitigate losses.

“Two: this is especially relevant because climate change is likely to play a role in increasing the thunderstorm risk in North America in the long term.

“The world finally needs to take vigorous action to reduce greenhouse gas emissions in order to prevent losses and ensure we are not taken unawares by the consequences of climate change, as we were with the current coronavirus pandemic.”

Economic losses from natural disasters around the globe reached around $68 billion in the first-half of 2020, a slightly lower figure than the 30-year average of $74 billion after adjusting for inflation.

Around $27 billion of the total was covered by insurance and reinsurance, Munich Re said, which is higher than usual (US$ 20bn) mainly due to the number of severe weather disaster losses in North America.

Demonstrating the impacts of this severe convective weather in the U.S., the country accounted for 47% of economic losses but a huge 82% of losses covered by insurance, figures that are considerably higher than the long-term averages of 35% and 60% respectively.

Contrasting this, Europe and Asia-Pacific both saw lower than normal levels of disaster losses in the first-half of 2020.

The most costly single event for the insurance and reinsurance industry was an Easter weekend severe thunderstorm and convecive weather event in the U.S., which saw 140 tornadoes across a wide swathe of southern states.

This outbreaks severe storms drove total economic losses of $3.4 billion, with $2.6 billion covered by insurance and reinsurance called on in support. 38 people sadly lost their lives from this outbreak.

Ernst Rauch, Chief Climate and Geo Scientist at Munich Re, commented on the U.S. storm activity, “While we cannot attribute individual events to climate change, the trend in our data clearly shows that losses from severe thunderstorms, particularly in North America, are on the rise, largely as a result of population and exposure growth in suburban and exurban regions as well as increased property values and poor construction practices. A contribution of climate change is also seen likely because higher temperatures and greater humidity favour the development of weather patterns like these. Even in these times of global pandemic, we should not forget that climate change is also a risk with systemic elements.”

The largest economic loss of the period was cyclone Amphan, which is estimated to have caused roughly $11.5 billion of damages in India and the region, although little of this will be insured.

Similarly, China is expected to suffer high single-digit billion dollars of economic losses from monsoon rains in June that led to severe river flooding of hundreds of rivers in many parts of the country, but again the insured percentage is expected to be relatively low.

For comparison, broker Aon estimated that global insured natural catastrophe losses were more than $30 billion for the first-half of 2020.