Natural disasters cost $175 billion in 2016, highest since 2012

St. Antoine hospital in Jérémie, Haiti was among the structures damaged when Hurricane Matthew ravaged the country earlier this year. (CDC Global/flickr)
Jenna Ladd | January 6, 2017

Shortly after the New Year, German insurance giant Munich Re announced that natural disaster damages were higher in 2016 than they have been since 2012.

Insurance losses totaled $175 billion over the last twelve months, which is two-thirds more than in 2015. The company counted 750 natural disasters internationally, which includes “earthquakes, storms, floods, droughts and heatwaves.” The 6.9 magnitude Earthquake that shook southern Japan was the world’s most costly natural disaster this year, claiming $31 billion in damages.

North America was plagued with the most natural disasters it has seen since the 1980’s, it experienced a total of “160 loss events in 2016.” Spring heat waves in Canada led to wildfires in Alberta, costing the region $4 billion, while August floods in the southern United States racked up $10 billion in losses.

Flood events made up 34 percent of this year’s total losses. Comparatively, these events accounted for 21 percent of total losses over the last ten years. Flash floods in Germany and France cost the region almost $6 billion this year. Peter Hoppe, head of Munich Re’s Geo Risks Research Unit, said these increases are related to “unchecked climate change.”

Hoppe said, “Of course, individual events themselves can never be attributed directly to climate change. But there are now many indications that certain events — such as persistent weather systems or storms bringing torrential rains – are more likely to occur in certain regions as a result of climate change.”

Indeed, a recently published report from the World Meteorological Organization outlines the relationship between human-induced climate change and the increasing frequency and intensity of natural disasters. Among other examples, the authors point out that the 2013 Australian heat wave was made five times more likely because of human-induced warming.

The report said, “Extreme events are always a result of natural variability and human-induced climate change, which cannot be entirely disentangled.”

COP 21 event focuses on insurance for climate-related natural disasters

A panel with representatives from France, Germany, and Spain were part of a panel that discussed the role of insurance companies when covering natural disasters. (Nick Fetty/CGRER)
Representatives from France, Spain, Sweden, and Switzerland were part of a panel that discussed the role of insurance companies when covering natural disasters. (Nick Fetty/CGRER)
Nick Fetty | December 9, 2015

PARIS – Representatives from various European nations got together as part of a COP 21 conference on Wednesday to discuss the role of the insurance industry when dealing with the natural disasters, many of which are worsened by the effects of climate change.

Caisse Centrale de Réassurance (CCR) sponsored the conference entitled “The challenges of natural disasters insurance against the future climate.” Margareta Wahlström – who serves as the Special Representative of the Secretary-General for Disaster Risk Reduction at the United Nations Office for Disaster Risk Reduction – kicked off the event by discussing the relationship between natural disasters and climate change to roughly 200 people in the Green Zone’s Nelson Mandela Auditorium.

“The face of climate change unfortunately is the increasing frequency, the increasing cost – be it social economic and political –  of the disruptive phenomenon we call [natural] disasters,” she said. “I think the questions we want to debate today are about how and where can the insurance agency do more to be part of the solution.”

She emphasized the need to understand the social impacts of natural disasters which can have devastating effects on communities.

“What is the impact on education? Employment? Poverty?” she asked, adding “Almost every disaster in world increases poverty in rich countries and in poor countries.”

Following Wahlström’s presentation, the auditorium was shown the premier of “Get Ready: Adapting to cope with natural disasters,” a 30-minute documentary that highlighted several recent natural disasters around the world and the role that insurance and mitigation efforts can play in the aftermath of such events.

One such event was the serve flooding that hit Thailand in 2011, resulting in more than 800 deaths and $32 billion in damage. The ripple effects of the floods were seen worldwide as prices rose for hard drives and automobiles produced in the southeast Asian country.

The documentary also addressed efforts taken by communities to mitigate the effects of flooding and other natural disasters. The southern French town of Sommières was one place where new ideas have been implemented to mitigate the effects of flooding. Sommières now has it so that only businesses can occupy the ground level of buildings throughout the four square mile town. Additionally, the town installed mobile electric boxes and parking meters which can be easily removed in the event of another flood. In 2012, the United Nations recognized Sommières as a model city for its efforts to mitigate flood damage.

Another example of mitigation efforts came from a Duth engineer who designed a way to put homes, roads, and other structures on floats that rise and lower with the level of the water. Similar efforts have been tried in England and France has considered adopting such measures.

The conference concluded with a panel of insurance experts discussing various ways that insurance companies can adapt their services to better serve the needs of those affected by natural disasters. Much of the discussion focused on increased cooperation between private insurance companies and governmental agencies. (Editorial Note: I’ve chosen not to quote any of the panelists as many of them spoke in French and I was only able to understand them through an English translator.)

The issue of natural disaster insurance is relevant to Iowans as major floods in 1993 and 2009 caused billions of dollars in damage to homes, businesses, and other property across the state. Additionally, Iowa’s capital Des Moines has been called “a global hub of the insurance industry, trailing only Hartford, Connecticut and megacities like New York.”