Natural catastrophe insurance costs hit record level

Hurricane Maria devastated Puerto Rico last year Keystone

Insurance companies paid out a record $144 billion (CHF138 billion) to cover the damage from natural catastrophes and man-made disasters last year – up from $56 billion in 2016, according to the world’s largest re-insurer Swiss Re.

Total losses stemming mainly from hurricanes, wildfires and flooding totaled $337 billion, the second-highest figure on record after 2011 and more than double 2016. This left a gap of $193 billion in damage not covered by insurance, the Zurich-based company said in its annual Sigma report.

Some 11,000 people lost their lives or went missing in disaster events last year, with natural disasters claiming 8,000 of those victims.

Hurricanes Harvey, Irma and Maria, which left a trail of destruction in the Caribbean, Puerto Rico and the United States, caused damage worth $217 billion. Only $92 billion of this destruction was covered by insurance. In terms of economic loss, only hurricanes Katrina, Wilma and Rita in 2006 were more costly.

“Insurers need to consider multiple hurricanes occurring in a given year, as much as the severity of individual events, in their modelling of hurricane risk,” the Sigma report stated.

The worst wildfires struck in California, Canada and Portugal, with all such natural disasters costing a record $14 billion. Flooding also caused significant financial damage, with a $6 billion Yangtze flood in China ranking as the worst Asian natural catastrophe of 2017.