Big gap between total losses and insured losses

Residents of Nemours, France, 50 miles south of Paris, navigate flooding in early June Keystone

Natural and manmade disasters caused about 10,000 deaths and at least $158 billion (CHF163 billion) in economic losses in 2016, Swiss Re reported on Thursday.

Insurance covered just 31%, or $49 billion, of those losses.

“The gap between total losses and insured losses in 2016 shows that many events took place in areas where insurance coverage was low,” the Zurich-based global reinsurer said in a statement.

Swiss Re’s annual tally shows a 68% jump from $94 billion of economic losses in 2015. Earthquakes, hail and thunderstorms, floods and other large natural catastrophes were to blame for most of it. Losses from manmade disasters fell to $7 billion, down from $9 billion in 2015.

Hurricane Matthew, which caused devastation in Haiti and throughout the east Caribbean before hitting the southeastern coast of the United States in the autumn, was the deadliest natural catastrophe of the year, claiming up to 733 lives. Economic losses from the tropical cyclone were $8 billion, half of it insured.

Globally, the $49 billion of insured losses represents a 32% increase from $37 billion in 2015.

Strong quakes

A string of shocks and aftershocks that hit Japan’s Kumamoto prefecture, including a 7.0-magnitude quake in April, claimed 137 lives and was the costliest disaster of 2016, causing $20 billion in losses, of which only a quarter was insured.

Major earthquakes struck in Taiwan, Japan, Ecuador, Italy and New Zealand. The string of shocks and aftershocks that hit Japan’s Kumamoto prefecture, including a 7.0-magnitude quake in April, was the costliest disaster globally. It killed 137 people and caused $20 billion in losses, only a quarter insured.

“Society is under insured against earthquake risk,” said Swiss Re’s chief economist Kurt Karl.

“And the protection gap is a global concern,” he said. “For example, Italy is the 8th largest economy in the world, yet only 1% of homes in Italy are insured against earthquake risk. Most of the reconstruction cost burden of this year’s quakes there will fall on households and society at large.”

Europe’s floods

Widespread flooding in the US, Europe and Asia, a hailstorm in Texas and wildfires at Canada’s Fort McMurray cost billions in losses.

That included $3.9 billion in losses – $1 billion of it uninsured – in Europe in late May and early June, when two slow-moving low-pressure systems caused thunderstorms, flash floods and river flooding. Hardest hit were France and Germany.