PLEA Network

13 March 2018, Munich RE, Natural disasters in 2017 were a sign of things to come – New coverage concepts are needed. 2017 was a wake-up call. After a number of relatively benign years, natural disasters in 2017 caused overall losses of US$ 340bn. This was the second-highest annual loss ever and almost double the previous year’s level – a figure roughly equivalent to the annual GDP of Denmark, Egypt or Israel. Insurers had to pay out a record US$ 138bn in losses. It is crucial that insurers and reinsurers take account of statistically rare loss events in their risk management calculations. One such rare event was the torrential rainfall and severe flooding that Hurricane Harvey brought to the Houston area in August. The series of three extreme hurricanes that struck within the space of just a few weeks – Harvey, Irma and Maria – is also indeed rare but by no means impossible, especially as experts predict that certain types of extreme weather events are likely to become more frequent in the future as a result of climate change. 2017 therefore gave us a foretaste of what we can expect in the future. Once again, significantly less than half the losses were covered by risk transfer solutions: the share of insured losses was higher than the previous year, but at 41% still well below the 50% mark. And this even though more than four-fifths of all losses were in North America, with its high level of insurance density. Read More here