Rising storm levels warning as natural catastrophe costs increase

Insured losses from major natural catastrophes in 2020 were 17% above the ten-year average but it could have been a lot worse according to research from broker Willis Towers Watson.

The broker has published its Summary of Natural Catastrophe Events 2020 which reported insured losses from major natural events cost roughly $78 billion, the fourth largest total since 2011, and about 17% higher than the ten-year average of $66.5 billion.

However, WTW warned the total does not reflect high levels of storm activity, because multiple hurricanes and tropical cyclones skirted major built-up areas last year.

The total loss figure arose despite the limited impact of North Atlantic hurricanes during the most active season on record with 30 named storms. Few of these made landfall, with Hurricane Laura causing an insured loss of $8 billion to $9 billion, the largest weather-related loss event. Instead, the total loss arose from a series of small and medium-sized events.

Yingzhen Chuang, Regional Director, Catastrophe Analytics, Willis Re International, said: “Natural catastrophe losses were high in 2020, but things could have been worse, given the number of storms which formed around the world. Fortunately, despite an active Atlantic Hurricane season, landfalls were limited. Whilst losses in Europe were modest, we did see a number of earthquake events as a reminder of the seismically active nature of southern Europe, as well as severe flooding from windstorms and hailstorm activity. During a year when Covid-19 dominated catastrophe loss discussions, there were nevertheless a series of smaller but impactful natural catastrophe events.”

In Europe, windstorm Ciara (Sabine) impacted more than ten countries producing nearly $2 billion of insured losses, amongst several other storms –Ines, Dennis, and Jorge – within a two-week period. “Such storm clusters have the potential to cause larger insured losses as a result of accumulated precipitation and wind damage, although the impact of this cluster was mostly driven by Ciara,” added the report.

In Asia, Tropical Cyclone Haishen caused under $1 billion of insured losses, well below those caused by similar storms during 2019’s cyclone season. The largest event of 2020 to hit Latin America and the Caribbean was hurricane Iota in November, with an estimated economic loss of about $1.3 billion, but a much lower insured loss.

Vaughn Jensen, Executive Vice President, Catastrophe Analytics, Willis Re North America, explained: “A record number of North Atlantic hurricanes formed in 2020, but landfalls did not occur in great numbers, or touch areas with highly concentrated insured exposures. If they had, the story of 2020 would have been dramatically different. However, the sheer number of storms – and the continued incidence of billion-dollar wildfires in the US and elsewhere, plus the severity of the Iowa derecho event – gives the industry cause to consider new emerging trends.”