Impact Forecasting, Aon Benfield’s catastrophe model development team, has released its Annual Global Climate and Catastrophe Report, which evaluates the impact of the natural disaster events that occurred worldwide during 2014.
The report concludes that 258 separate global natural disasters occurred in 2014, compared to a ten-year average of 260 events, causing a combined total insured loss of $39 billion – 38 percent below the ten-year average of $63 billion, and the lowest annual insured loss total since 2009.
The two costliest insured loss events of the year were both a result of severe thunderstorms, in June (Europe: $3.0 billion) and in May (United States: $2.9 billion).
Meanwhile, global economic losses from natural catastrophes in 2014 stood at $132 billion – 37 percent below the ten-year average of $211 billion. The September flood event in northern India and Pakistan resulted in the largest economic loss of the year, causing an estimated $18 billion in damage and representing the fifth consecutive year that Pakistan has registered a billion-dollar flood event.
Stephen Mildenhall, Chief Executive Officer of Aon Analytics, said: “Global insured property catastrophes accounted for 8.6 percent of global property premium in 2014, compared to a ten-year average of 13.9 percent. The secular increase in catastrophe losses since 1980, which is broadly in-line with global GDP, continues to be an engine of growth for the insurance industry.
“With its abundant capital and sophisticated risk management tools, the industry is better positioned than ever to deliver on its core mission of providing critical risk transfer products that enable growth and development all around the world.”
The top three perils – flood, tropical cyclone, and severe weather – accounted for a 72 percent of all economic losses during the 12 months under review, while the deadliest event of 2014 was a multi-month stretch of flash flooding and landslides that killed an estimated 2,600 people in Afghanistan.
Steve Bowen, Associate Director and Meteorologist at Impact Forecasting, said: “Despite 27 individual billion-dollar natural disasters in 2014, overall economic losses were below average for a second consecutive year. The most significant losses were found in Asia, where the region sustained 57 percent of the overall economic loss and each of the top five costliest events.
“However, the United States incurred 53 percent of the global insured loss total and accounted for six of the top ten costliest insured losses of the year. The severe thunderstorm peril was the most expensive for public and private insurers as hail and damaging straight-line wind events caused multi-billion-dollar losses in the U.S. and Europe. Historically the costliest peril, tropical cyclone losses were again below normal globally on an economic and insured loss basis following another year without a major land falling U.S. hurricane.”
Despite 75 percent of 2014 natural disaster losses occurring outside of the United States, the territory accounted for 53 percent of global insured losses, driven by its relatively high insurance penetration. The top ten insured loss events of 2014 comprised five severe weather outbreaks (four in the U.S.), two winter weather events (Japan and the U.S.), Hurricane Odile (Mexico), flooding (United Kingdom), and drought (U.S.).
No global territories sustained aggregate insured losses above their ten-year averages during the year. The Americas (non-U.S.) and Asia Pacific (APAC) were closest to their insured averages; while the United States, and Europe, the Middle East, and Africa (EMEA) were well below normal.
Notable events over the 12 months included major flooding in India, Pakistan, China, and Southeast Europe; billion-dollar convective thunderstorm events in the United States, France, and Germany; winter storms in Japan and the United States; and widespread drought in the United States and Brazil.
A total of 13 tropical cyclones (Category 1+) made landfall globally in 2014 – slightly below the 1980-2013 average of 16. Ten of the landfalls occurred in the Northern Hemisphere, including six in Asia. As at December 31, 2014, the U.S. had not witnessed a major hurricane landfall for a record nine consecutive years.
Meanwhile, 2014 was the warmest year since global land and ocean temperature records began in 1880.
The full Impact Forecasting report is available.
Source: Aon Benfield/Impact Forecasting