2016 catastrophe events cost the world USD 210 billion

The recently released 2016 Annual Global Climate and Catastrophe Report reveals that there were 315 natural catastrophe events in 2016 that generated economic losses of USD210 billion.

Aon Benfield’s catastrophe model development team, launched this report which evaluates the impact of the natural disaster events that occurred worldwide during the last 12 months to promote awareness and enhance resilience. The reports states that 2016 was the seventh highest year on record with the combined economic loss exceeding the USD200 billion threshold for the first time since 2013.

The top three perils – flooding, earthquake and severe weather – combined for 70 percent of all economic losses in 2016. Overall, just 26 percent (USD54 billion) of overall economic losses were covered by insurance in 2016 due to a higher percentage of damage occurring in areas with a lower insurance penetration. However, the public and private insurance industry losses were 7 percent above the 16-year average and the highest insured loss total since 2012. 2016 marked the end of a four-year downward trend since the record year in 2011.

Peter Cheesman, Head of Aon Benfield Analytics spoke to Broker Buzz about where Australia stands in the 2016 global disaster figures. On the effect natural disasters in Australia have he said “Other than a slight impact on global reinsurance rates, natural disasters in Australia are largely independent of other global events”.

“It was a quiet year for tropical cyclone impacts compared to previous years, although other weather events like bushfires still had an impact. Despite the east coast low in June and severe storms in South Australia, Victoria and New South Wales in the second half of 2016, it was not a highly significant insurance catastrophe year, compared to say in 2011, when we saw significant floods and the impact Cyclone Yasi had on Queensland”.

Impact Forecasting is Aon Benfield’s risk mapping platform. It allows a company to overlay all of its global locations with near real time catastrophe events, historical or hypothetical hazards ranging from hurricanes and floods to earthquakes and even terrorism attacks.

The Impact Forecasting model is used to help insurers decide how much capital protection they require from the reinsurance market. It does not predict when and where an event might occur, rather it predicts the implications those events might have if they did occur.

“It’s important that broking clients understand their level of coverage and make sure they are covered for all aspects that make up a loss” stressed Cheesman.