Natcat figures for the first half of 2019

According to Natcat figures published by Munich RE, cyclones in Mozambique and India with high casualty numbers and losses in the billions of dollars, for the first half of 2019, once again illustrate the urgent need for improved resilience against the consequences of natural disasters.

Tornadoes in the USA, severe thunderstorms in Europe and floods in Australia were the costliest natural disasters in industrialised countries. Due to random factors, overall global losses in the first six months were lower than the long-term average.

Overview of natural disaster figures

A total of 370 loss events produced overall losses of US$ 42 billion, which, after adjustment for inflation is lower than the 30-year average of US$ 69 billion. However, the losses from the severe floods in southeast China, which began in June and reportedly caused billions of dollars in damage, are not included in this figure.

Insured losses came to US$ 15 billion, which is below the long-term average of US$ 18 billion. For many events, the insured portion of the overall economic loss was extremely small due to low insurance penetration in many of the affected countries.

Around 4 200 people lost their lives in natural disasters. This figure is similar to that of the previous year (approximately 4 300). The trend towards fewer casualties has at least continued, thanks to more effective protection measures: the 30-year average for the same half year period is more than 27 000 fatalities.

In May, thunderstorms with tornadoes in the Midwestern US produced the heaviest losses, at US$ 3.3 billion. The insured portion came to around US$ 2.5 billion.

The deadliest disaster worldwide, up to the end of June, was Cyclone Idai. Mozambique, one of the world’s poorest countries, was particularly hard hit. In March, Cyclone Idai made landfall near the port of Beira (500 000 inhabitants). With wind speeds of approximately 170 km/h, the storm wrecked a huge number of homes and buildings, most of which were quite simple structures. In addition, in combination with the heavy rainfall, the flood wave from the storm triggered flooding over the flat coastal terrain that extended far inland. Overall losses in Mozambique and neighbouring countries came to approximately US$ 2 billion. Just a few weeks later, Mozambique was again hit by another cyclone, this time Cyclone Kenneth, which made landfall further north in a less populated area. Losses totalled around US$ 230 million.

Greater assistance to countries

“When looking at the first half of 2019, disasters in poorer countries are worrying because the victims so often have virtually no insurance cover. Cyclone Idai, was in relative terms worse for that country than the Tohoku earthquake – the costliest natural disaster on record – was for Japan in 2011. Almost nothing was insured, so very few of the people affected were able to obtain prompt financial assistance for the loss of their belongings. Experience has shown that such countries often take years to recover from disasters,” Torsten Jeworrek, Member of the Board of Management at Munich RE.

“The insurance industry therefore needs to promote partnerships with governments and development banks to provide greater assistance to countries like Mozambique,” continued Jeworrek.

Ernst Rauch, Chief Climate and Geoscientist at Munich Re said, “In the Caribbean, for example, insurance solutions in cooperation with governments and development banks have been able to provide financial assistance before international aid programmes can get off the ground. A similar solution would also make sense for Mozambique. But it is absolutely essential to  take more effective preventive measures in industrialised countries as well. We are working systematically at improving our analysis tools so that we can assess risks more accurately and then develop new solutions to allow us to assume risks.” 

Boniface Chiwota, Executive Manager at Munich Re of Africa said, “Broadly speaking, risk management responses to climate change risks fall into two categories; adaptation to the largely physical consequences of climate change and mitigation of greenhouse gas (GHG) emissions and its associated transition risks. With the former, the South African insurance industry can apply insurance techniques designed to cope with increasing losses like prospective pricing, accumulation control, exclusion of particularly hazardous areas etc. The industry is already engaging with various stakeholders like public sector institutions, as well as non -governmental bodies, to come up with Public Private Partnerships with a view to developing and acting upon a climate resilience adaptation strategy. This strategy could identify the broad business and strategic risks; develop a granular view of the risks involved then develop a mitigation strategy involving insurance and resilience. With the latter, the industry can play a significant role in promoting the use of renewable energies by insuring such ventures as Solar and Wind power plants as this will ultimately reduce the disproportionate use of fossil fuels.”

Editor’s Thoughts:
It is clear that the risk management landscape is changing and needs revised thinking. And now, more than ever, risk management strategies to assess and control risks need to be at the front to actively advise clients of the potential and changing threats. Do you agree with this? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts myra@fanews.co.za.