The cost of natural catastrophes worldwide in 2018 amounted to $160 billion, according to a report by Munich Re. This figure is lower by almost a half from the $350 billion recorded in 2017. Even so, the German reinsurer said the number last year is still higher to the estimated $140 billion average of the previous 30 years.
Insurance and reinsurance companies paid out roughly $80 billion worth of claims for the natural disasters in 2018, comprising half of the total cost. This figure decreased from $140 billion in 2017, but still, it is nearly double the 30-year average of $41 billion, said Munich Re.
The US Suffered the Costliest Catastrophes
In the same report, the company reported that the forest fires that razed parts of California are the single costliest natural disaster in 2018. It tagged a $16.5-billion loss, $12.5 billion of which were insured. Meanwhile, hurricanes Florence and Michael incurred a total of $30 billion in damages, half of those were insured.
The German reinsurance company also said that in 2018, the number of natural disasters in different parts of the world ballooned by 13% to 850 from 740 events in 2017. However, these catastrophes took fewer lives with a total of 10,400 casualties in 2018, which is lower compared to 13,000 in 2017.
Global Reinsurance Capital Suffers Loss
Meanwhile, Aon stated that the global reinsurance capital, which is made up of traditional and alternative capital fell by 2% in 2018 to $595 billion from $605 billion in 2017. In the report titled Reinsurance Market Outlook – January 2019, published by global professional services provider, the global reinsurance capital remained resilient despite the $230 billion loss throughout two years.
The stronger U.S. dollar and rising interest rates are some of the reasons traditional reinsurance capital slid by 4 percent last year to $496 billion. On the other hand, alternative capital surged to 11% last year to $99 billion, which was an increase of US$10 billion over 2017.
Aon also reported that payouts by the private insurers and government-sponsored programs in 2018 were fourth-highest on record. The report also said insurers and reinsurers issued catastrophe bonds totalling $9.7 billion in 2018.