There were 189 natural catastrophe events in 2014, the highest ever on sigma records, causing global economic losses of $110 billion. Around 12 700 people lost their lives in all disaster events, down from as many as 27 000 in 2013, making it one of the lowest numbers ever recorded in a single year.
Total economic losses from all disaster events in 2014 were $110 billion, down from $138 billion in 2013, and well below the previous 10-year annual average of $200 billion. Of these total economic losses, $101 billion were due to natural catastrophes, with cyclones in Asia Pacific causing the most damage. Of the $35 billion in global insured losses last year, $28 billion were attributed to natural catastrophe events.
Weather events in the US, Europe and Japan cause most insured losses
“The frequency of catastrophic events appear to be increasing, with a record number of natural catastrophes last year,” said Kurt Karl, Swiss Re’s chief economist. For example, a series of severe thunderstorms triggered sizable losses in both the US and Europe last year. In May, a spate of severe storms with hail in the US resulted in the largest insured loss event of the year, with insurance claims of $2.9 billion.
In Europe in the following month, the low pressure system Ela brought large and damaging hail to parts of France and Belgium, and strong winds in Germany. The combined insured losses were $2.2 billion, making Ela the second most expensive hail event in Europe on sigma records.
Harsh winters in the US and in Japan were another major cause of insurance claims in 2014. The US experienced multiple storms with heavy snow and long stretches of freezing temperatures. Insured losses from all winter storms in the US were $2.4 billion, more than double the average of the previous 10 years. The largest loss event was a storm in January that impacted 17 states, with snow falling as far south as Florida, leading to overall insured losses of $1.7 billion. Meanwhile in Japan, a severe cold snap in mid-February brought the heaviest snow in decades, killing 26 people and injuring many more, primarily in road accidents. The insured loss total was estimated at $2.5 billion.
It was another quiet hurricane season in the North Atlantic in 2014, with no major hurricane making US landfall for the ninth year in succession. This was the main reason for the overall below-average insured losses last year. In contrast, there were 20 named storms in the eastern Pacific, the most since 1992. Of those, in September, Hurricane Odile in the Baja of California, Mexico, caused the biggest event loss. The region is a tourist destination with many hotels and commercial properties and consequently, insurance penetration is relatively high. The insured losses were $1.7 billion, making Odile the second-largest insured loss event ever in Mexico, after Hurricane Wilma in 2005 which caused insured losses of $2.1 billion.
Protection gap issues remain
Lack of insurance cover, however, remains an issue in many countries. For example, in May, low pressure system Yvette brought very heavy rain to Serbia, Bosnia and Croatia, in some areas the heaviest downpour in 120 years. Several dams failed and the ensuing floods and debris flows destroyed houses, infrastructure and crops. There were 82 deaths, the largest loss of life from a natural catastrophe event in Europe in 2014, and total losses were estimated to be $3 billion, mostly uninsured. Italy also endured a very wet year, with a series of flash floods events causing overall economic losses of more than $1 billion, also largely uninsured.
There are areas which are underinsured in the US also. In August last year, the South Napa earthquake caused structural and inventory damage totalling $0.7 billion, particularly in the numerous barrel storage facilities of the local wine industry. However, the insured loss was just $0.16 billion. “In spite of high exposure to seismic risk, insurance take-up in San Francisco County and California state generally is still very low, even for commercial properties. That’s why insured losses, in certain areas, can be surprisingly low when disaster events happen,” says Lucia Bevere, co-author of the study.