Major natural catastrophes caused approximately $71.5 billion in insured losses in 2018, just over half the roughly $120 billion of insured losses from 2017 but just slightly above the $65.5 billion average of losses since 2011, according to a report Wednesday from Willis Towers Watson PLC.

Major catastrophes leading to nine-figure losses included Hurricane Michael, which hit Florida, Georgia and the Carolinas Oct. 10-12, causing some $6 billion to $10 billion of insured losses; and the Carr, Mendocino, Camp and Woolsey fires in California, which caused a combined loss of approximately $15 billion, Willis Towers Watson said

Across the globe, Tropical Cyclone Jebi hit Japan in early September and caused some $8.5 billion of insured losses, the largest-ever loss from a tropical cyclone in Japan, according to the brokerage.

Although “Europe saw lower insured losses from natural disasters during 2018 than in recent previous years,” Winter Storm Friederike, called David in France, nonetheless still caused some $2 billion in insured losses, hitting mainly Germany, the Netherlands and Belgium, Willis Towers Watson said.

“The industry experienced a large number of midsized natural catastrophes,” Karl Jones, London-based managing director and head of international catastrophe analytics at Willis Re, said in a statement issued with the report. “Three events — the Camp Fire, Typhoon Jebi, and Hurricane Michael — have all reached at least the high single-digit billions in insured losses, but only the Camp Fire seems likely to exceed the level of $10 billion.”

He added: “However, a large number of smaller, billion-dollar losses, principally storms, has added up to make 2018 a costly catastrophe year.”

“With the exception of the major California wildfires, these losses are well within modeled expectations,” he noted.

The Willis Towers Watson numbers differ slightly from those recently published by Munich Reinsurance Co. 

Catastrophe losses have now been substantial for two years running, and strategy is coming under the microscope, according to Vaughn Jensen, Bloomington, Minnesota-based executive vice president and head of North America catastrophe analytics at Willis Re.

“The (insurance and reinsurance) industry has now absorbed more than $200 billion worth of natural catastrophe losses over a two-year period,” he said in the statement. “It has been a significant test for both traditional and ILS capacity but overall the sector’s capitalization remains strong.”

He added, however: “The frequency of catastrophe losses over the last two years continues to result in many primary insurers rethinking their strategy around retention levels.

 

 - Business Insurance