Disaster Losses Hit Five-Year High of $175B

Some of last year's disasters such as storms in Texas struck areas with high insurance penetration, accounting for a 42% increase in payouts.
Matthew HellerMarch 29, 2017
Disaster Losses Hit Five-Year High of $175B

Total economic losses from natural catastrophes and man-made disasters nearly doubled in 2016, with Asia being hit worst, while insurance payouts increased 42% from a year earlier, according to a report by Swiss Re.

Globally, there were 327 disaster events in 2016, the reinsurer said, resulting in total economic losses of $175 billion, up 86% from 2015. Global insured losses from disasters rose to $54 billion in 2016 from $38 billion the previous year.

Both the economic and insured losses were the highest since 2012 and reversed the downward trend of the previous four years.

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The increase in economic losses last year reflected a high number of sizable disaster events, including earthquakes, storms, floods and wildfires, across all regions. Of the 327 events, 191 were natural catastrophes and 136 were man-made, Swiss Re said.

The earthquakes on Kyushu Island in Japan in April, which killed around 50 people, inflicted the heaviest economic losses, racking up a bill of between $25 billion and $30 billion.

Some events struck areas with high insurance penetration, accounting for the 42% increase in insured losses. Natural catastrophes resulted in payouts of $46 billion, the same as the 10-year annual average, while insured losses from man-made disasters were $8 billion, down from $10 billion in 2015.

“Insured losses made up about 30% of total losses, with some areas faring much better because of higher insurance penetration,” Kurt Karl, chief economist at Swiss Re, said in a news release.

North America accounted for more than half the global insured losses in 2016, largely due to a record number of severe convective storm events in the U.S. and the high level of insurance penetration for such storm risks. The costliest event was a hailstorm that struck Texas in April, resulting in economic losses of $3.5 billion, of which $3 billion were insured.

In Canada, the wildfires that hit Alberta and Saskatchewan in May through July were the country’s biggest insurance loss event ever. There were record payouts by insurers, with 68% of all personal property claims being settled by the end of the year.

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