Natural disasters to cost global insurers $95bn
Earthquakes in Mexico along with hurricanes Harvey, Irma and Maria will cost the global insurance industry approximately $95bn (£72bn), according to preliminary estimates by Swiss Re.
The world’s second largest reinsurer said that its combined claims burden from the natural disasters would be around $3.6bn, net of retrocession and before tax.
However, it added that these estimates were subject to a higher than usual degree of uncertainty, and that they may need to be adjusted as the claims assessment process continues.
“The most recent natural catastrophes have been extremely powerful and we extend our sympathies to all those affected by these events,” Swiss Re group chief executive officer, Christian Mumenthaler, said.
“It is during these times that we demonstrate our differentiated value proposition and show the value of insurance and reinsurance to society."
Of the combined losses, claims from the two earthquakes that struck Mexico in September are expected to be approximately $175m, meaning that the hurricanes are likely to be substantially costlier.
This comes after research from Aon Benfield revealed the first half of 2017 saw a renewed surge of capital into the reinsurance sector, raising the total amount available to a record level of $605bn at 30 June.
In addition, it was found that although the US is one of the most insured countries in the world, almost 50% of the economic losses sustained from natural disasters remained unprotected last year.
The research also shows that much of the rest of the world remains chronically under-insured at a time when the frequency of severe weather events is increasing.
“This leaves the government, and therefore taxpayers, to pick up most of the bill,” Aon Benfield CEO, Eric Andersen, said.
“At the same time, we have an 'over-capitalised' reinsurance industry, and new investors actively seeking access to diversified insurance risk.”
“There needs to be a significant step-up in the efforts made to address the protection gap evident globally."
*Article extracted from: http://www.theactuary.com/news/2017/10/american-earthquakes-and-hurricanes-to-cost-global-insurers-95bn/ (27 October 2017, 9:30pm)