2017 costliest year on record for weather disasters – Aon global catastrophe report
SYDNEY, January 25, 2018 – Impact Forecasting, Aon Benfield’s catastrophe model development team, has released its Weather, Climate & Catastrophe Insight: 2017 Annual Report, which evaluates the impact of worldwide natural disaster events during 2017. Aon Benfield is the global reinsurance intermediary and capital advisor of Aon plc (NYSE:AON).
The report reveals that there were 330 natural catastrophe events in 2017 that generated economic losses of USD353 billion – of which 97 per cent (USD344 billion) was due to weather-related events, including Cyclone Debbie in Australia, Hurricanes Harvey, Irma and Maria in the US and Caribbean, and Typhoon Hato in China. 2017’s natural catastrophe losses were 93 percent higher than the 2000-2016 average.
Cyclone Debbie triggered widespread and extensive flooding across eastern Australia in March 2017 and became the second-most costly Australian cyclone on record after Cyclone Tracy devastated Darwin in 1974. Cyclone Debbie prompted nearly 74,000 claims to be filed across eastern Australia, amounting to USD1.3 billion and was the costliest event of the year for insurers in Asia-Pacific. The remnants of Cyclone Debbie went on to generate New Zealand’s largest insured loss for 2017 with USD67 million.
Peter Cheesman, Head of Aon Benfield Analytics Asia Pacific, commented: “While 2017 was an expensive year for the insurance industry, the traditional reinsurance market was well capitalised to withstand the high volume of payouts. This was primarily because more risk was being retained by primary insurers and more catastrophe exposure was laid-off into the capital markets. As a result, the losses in 2017 have been absorbed without compromising the availability of reinsurance capacity.”
Peter added “In Australia, the losses from Cyclone Debbie demonstrate that the key drivers of property damage in cyclones can vary significantly depending on the event. In slow-moving events like Cyclone Debbie, the majority of damage was caused by localised flooding and water ingression rather than direct wind damage to the exterior structure. Major flooding also occurred up to a week after the cyclone initially made landfall making interpretation of the hours clause critical in speculating losses.”
Steve Bowen, Impact Forecasting director and meteorologist, said: “The high cost of disasters in 2017 served as a reminder that we continue to face increasing levels of risk as more people and exposures are located in areas that are particularly vulnerable to major, naturally occurring events. As weather scenarios grow more volatile in their size and potential impact, it becomes more imperative than ever to identify ways to increase awareness, improve communication, and lower the insurance protection gap. We know natural disasters are going to occur. The question is how prepared are we going to be when the next one strikes.”
Additional key findings include:
- Despite the high economic cost of natural disasters in the APAC region only 13 per cent of disaster losses in 2017 were covered by insurance. The percentage was much higher in Australia at 56 per cent due to greater take-up rates of insurance.
- Cyclones and cyclone-driven flooding were the costliest peril of the year in terms of both economic and insured losses. Global economic losses totaled slightly more than USD233 billion during 2017, significantly higher than the 2000-2016 average of USD47 billion.
- 31 billion-dollar individual natural disaster events occurred globally. Cyclone Debbie was the only natural disaster in the APAC region to trigger insured losses beyond USD1.0 billion in 2017.
- In Australia in 2017 severe weather events (damage incurred from convective storms) resulted in economic losses of more than USD825 million dollars.
- In addition to the flooding which followed Cyclone Debbie, three separate flood events in Australia in 2017 saw the loss of nine lives and economic losses of more than USD200 million.
- Globally, wildfires caused USD14 billion of insurance losses in 2017 – the highest on record for the peril.
- In Australia, wildfires resulted in losses totaling USD85 million, with over 1,200 claims.
Read the full Weather, Climate & Catastrophe Insight: 2017 Annual Report: here
Watch meteorologist and author Steve Bowen’s short film on the key findings of the report: here
Access current and historical natural catastrophe data, plus event analysis, on Impact Forecasting’s Catastrophe Insight website
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