June Catastrophes Cost Global Economy $5 Billion; U.S. Storms Dominate: Aon

Floods and storms cost the global economy more than $5 billion in June, with most of those losses generated in the United States, according to an Aon catastrophe report.

In the U.S., large hail, tornadoes, straight-line winds and isolated flash flooding all contributed to an aggregated economic loss expected to exceed US$3.0 billion, said Impact Forecasting, Aon Benfield’s catastrophe model development team.

Of that total, public and private insurance entities were expected to cover at least US$2.0 billion, said Impact Forecasting’s June 2017 Global Catastrophe Recap report.

The most significant event from a financial perspective occurred on June 11 across parts of the upper Midwest, where a series of powerful and fast-moving thunderstorms left a trail of damage in Minnesota, Wisconsin and Michigan, the report said.

Among the hardest-hit areas was the Minneapolis-Saint Paul metropolitan region, where substantial wind and hail damage affected homes, businesses, and vehicles. Insurance payouts from this event alone were likely to approach US$1.0 billion, while the overall economic cost was estimated at around US$1.4 billion.

“Costly impacts resulting from severe convective storms were not solely confined to the United States in the month of June,” said Adam Podlaha, global head of Impact Forecasting, in a statement.

“Parts of Europe – notably Germany – incurred a significant cost resulting from large hail as the industry continues to get a better handle on using catastrophe models to further understand impacts from the peril,” he added. “Lightning was also the primary cause of several major wildfires in South Africa; expected to result in one of the costliest payouts for a natural disaster in the local industry’s history.”

Meanwhile, major flooding impacted at least nine provinces in southern China during June, killing at least 31 people and impacting more than 130,000 homes. The catastrophe was caused by torrential downpours associated with the annual Mei-yu rains.

China’s official Ministry of Civil Affairs (MCA) listed aggregated economic losses at more than US$2.4 billion, which resulted in the flooding becoming the costliest individual global natural catastrophe in the month of June.

The report went on to list other natural peril events that occurred during June, including:

  • Thunderstorm activity in Europe peaked on June 22, when a particularly violent outbreak caused significant losses to German insurers, estimated at €400 million (US$455 million).
  • Torrential monsoonal rainfall caused devastating floods and landslides in Bangladesh and neighboring northeast India, causing at least 169 fatalities.
  • Other flood-related events in Asia (including China, Taiwan, Indonesia, Bangladesh, and India) resulted in a combined death toll of at least 312 people.
  • Additional significant floods occurred in Central America, Chile and Western Africa.
  • Strong thunderstorms affected Western Cape in South Africa, where the region was previously suffering from severe drought. However, the greatest damages occurred after lightning strikes prompted several catastrophic fires. Published reports indicated that the local insurance industry could face payouts approaching ZAR4.0 billion (US$305 million); one of the costliest events in the region’s history.
  • The combination of extreme heat and dry thunderstorms led to one of the deadliest wildfires in Portuguese history, killing 64 people and destroying hundreds of homes and businesses. Local government indicated that economic losses may reach €497 million (US$565 million).
  • Two tropical storms made separate landfalls in North America: Beatriz in Mexican state of Oaxaca and Cindy in the US Southeast. Damage costs from each event were largely negligible.
  • An offshore magnitude-6.3 earthquake damaged more than 1,100 homes on the Greek island of Lesbos.

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Source: Impact Forecasting/Aon Benfield June report

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Article source: http://www.insurancejournal.com/news/international/2017/07/10/457077.htm