2018 registers as the fourth most costly catastrophe year ever in inflation-adjusted dollars (US$80+ billion), following record insured catastrophe losses of US$150 billion in 2017. Together, 2017 and 2018 constitute the most costly two-year period ever for insured losses, although they are unlikely to come close to challenging the combined, inflation-adjusted, reinsured losses sustained in 2004 and 2005.
In the past two years, the insurance industry has endured:
- The three most extreme hurricane rainfall events in U.S. history with Harvey (2017, Texas), Lane (2018, Hawaiii) and Florence (2018, North Carolina).
- Three category 4 storms that made landfall in the continental U.S. in the past two seasons with Harvey and Irma in 2017, while Michael was the strongest hurricane on record to strike the Florida panhandle, in 2018. When considering other major landfalling tropical cyclones to U.S. territories, Maria devastating Puerto Rico in 2017 and Yutu hitting Saipan in the Western Pacific as a category 5 storm, the last two years have been among the most active for the U.S. in history for intense hurricane landfalls.
- Five of the six most costly wildfires on record in California, tallying more than US$25 billion in insured losses – the two costliest years on record for the insurance industry. These events have fundamentally changed the landscape of wildfire risk in the U.S. Additionally, meaningful wildfire events across the Nordic regions of Europe, Portugal and Australia are raising the concern of this peril on a global basis.
- An active year of typhoons, floods and earthquakes across Asia, which resulted in insured losses eclipsing US$20 billion. Notably, historic flooding in Japan during the spring which was then followed by the strongest typhoon landfall in 25 years with Typhoon Jebi. In concert, the globe has experienced multiple severe catastrophe events that were believed to have significantly higher return periods than modeling data points. JLT Re experts believe our clients should be aware of the pending changes and proactively anticipate future enhancements.
Key questions include:
- Is exposure growth or change in meteorological phenomena at play for general increases in loss potential over time, particularly for coastal hurricane risk, desirable forested areas on the edge of communities, and the urban sprawl impact on severe convective storm loss potential?
- What does two consecutive active hurricane landfall seasons in the Atlantic reveal about medium-term rates?
- What can we learn from these events and the impact that they have on the (re)insurers, insureds and communities?
These are the types of questions and challenges that JLT Re’s peril experts consider when engaging with our clients, prospects and the insurance industry as a whole. In the last two years, our peril experts have conducted numerous field studies, surveying the damage done by the California wildfires, the impact of Hurricane Maria on Puerto Rico and Irma on Florida. Our insight gained from these studies help to fuel independent research and understanding of the complexity of these events. Our ongoing research drives JLT Re’s bespoke solutions and assists our clients with managing business through a catastrophe.
Please read on to learn what JLT Re catastrophe specialists, engineers and scientists have to say about the major catastrophe events of 2017 and 2018. Their professional opinions of leading research and trends will advance our ongoing understanding of natural catastrophe risk and bolster more effective risk management
and transfer. On behalf of the team responsible for this compilation, we appreciate your continued interest and look forward to thoughtful engagements and further advancement of catastrophe risk in 2019. For real-time updates on global natural catastrophes, visit the acclaimed JLT Re CATz blog for succinct, easy-to-digest
and informative content at http://catblog.jltre.com.
Christopher Zumbrum, Catastrophe Risk Management Services Officer
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