Insured losses from catastrophes hit the highest level on record last year, rising to $144bn (£102bn), up from $56m in 2016, new research shows.
According to insurance giant Swiss Re’s latest Sigma report, insurance covered less than half of the total economic loss from natural catastrophes and man-made disasters, which hit $337m in 2017, almost double the $180bn loss recorded in 2016.
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Of that total, $330bn came from natural catastrophe-related losses, mainly hurricanes and other weather events, while $7bn arose from man-made disasters such as terrorist attacks, major fires and explosions and maritime disasters.
More than half of the total insured losses last year were due to Hurricanes Harvey, Irma and Maria (HIM), which caused chaos in the US and Caribbean in the second half of 2017, which racked up estimated costs of $92bn. Hurricane Maria is now ranked as the third most costly event in terms of insurance losses since records began in 1970, while the other two are also ranked in the top 10.
Swiss Re said hurricanes are likely to occur more often in future “with more frequent convergence of conditions favourable to hurricane formation”.
“With a warming climate, the frequency of events that combine heavy rains and winds will likely increase. So too will events with severe storm surge, in view of rising sea levels,” the company added.
“This is cause for concern, not least because HIM do not represent a worst-case scenario: Swiss Re's natural catastrophe model contains various scenarios where annual insured losses resulting from hurricanes exceed $250bn. In the interests of societal resilience, further research on clustering of hurricanes and the impact of global warming on storm formation is required.”