When the unforeseen strikes, insurance practices everywhere are left holding their breath as they lie in wait for the dreaded number – the damage loss estimates – to come in. These numbers are astronomical, to say the least. Almost 70% of all business financial losses arise from only ten circumstances – just ten! with the single largest identified cause being losses resulting from fires followed by aviation crashes and human-related errors.
Last year saw several natural catastrophes that triggered high insured loss amounts, including the California wildfires, and tropical cyclones that passed through Japan, the Philippines, the US and China. Now, insurers around the World are growing increasingly anxious, given the alarming frequency of occurrences in the past decade alone. The economic costs of last year’s 394 natural catastrophe events came up to $225B with insurance covering $90B of the overall total, creating the fourth costliest year on record of insured losses!
Munich Re NatCatSERVICE
Regrettably, when the unforeseen strikes there is a severe loss to both life and property – and hence the substantial loss claims they create. While these figures are in no doubt staggering, they are merely to illustrate the incredible gap between those described above and the largest insurance payouts ever recorded. Here are the top five payouts, in order of value.
Alliance Global Corporate & Specialty Report 2019
While $89B of the overall insured total of $90B was borne from weather-related disasters, insurers are actively monitoring climate change reports to take in a bigger view of the changes the planet is undergoing – following two back-to-back years of mega catastrophe-event losses.
The ‘Insurance Protection Gap’ or uninsured losses (the lower this value, the better), is a global problem that affects emerging nations and developed countries alike. Properties and economies with high insurance penetration recover much more quickly after a natural disaster than economies that rely on governments for their recovery.
The re/insurance industry continues to withstand the payouts backed up with $595B of capital. However, their focus will be on managing the cost of climate change and weather events by helping to further reduce the current protection gap of 60%.
References & Further Reading
https://www.agcs.allianz.com/news-and-insights/news/global-claims-review-2018.html
https://www.munichre.com/en/media-relations/publications/press-releases/2019/2019-01-08-press-release/index.html
https://www.insurancejournal.com/news/international/2019/01/22/515420.htm
https://www.mckinsey.com/industries/financial-services/our-insights/claims-in-the-digital-age
https://www.insurancejournal.com/news/international/2018/01/17/477266.htm
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