Total economic losses from natural catastrophes and man-made disasters amounted to US$175 billion in 2016, almost twice the $94 billion seen in 2015, the latest sigma study from the Swiss Re Institute says.
Global insured losses from disasters were $54 billion in 2016, up from $38 billion in the previous year.
The losses in 2016 – both economic and insured – were the highest since 2012 and reversed the downtrend of the last four years. This was due to a high number of sizable disaster events, including earthquakes, storms, floods and wildfires in 2016, across all regions.
Some events struck areas with high insurance penetration, which accounted for the 42% increase in insured losses. That also means that many people in those areas were better equipped to recover from the shock of a disaster, for example with prompt settlement of their insurance claims.
Globally there were 327 disaster events in 2016, of which 191 were natural catastrophes and 136 were man-made. In total, the disasters resulted in economic losses of $175 billion, almost double the level in 2015.
As in the previous four years, Asia was worst hit in terms of the number of disaster events (128) and resulting economic losses (approximately $60 billion).
The earthquake on Kyushu Island, Japan in April inflicted the heaviest economic losses, estimated to be between $25 billion and $30 billion.
There were also many severe precipitation events in 2016, which in turn triggered major flooding over large areas.
In China, there was extensive flooding along the Yangtze River basin in July. The economic losses were estimated to be $22 billion, making it the costliest Yangtze River flood event since 1998. Here, however, with low insurance penetration, the insured losses were just $0.4 billion.
Worldwide, around 11 000 people lost their lives or went missing in disasters in 2016, down from more than 26 000 in 2015.
"In 2016, both economic and insured losses were close to their 10-year averages. Insured losses made up about 30% of total losses, with some areas faring much better because of higher insurance penetration," says Kurt Karl, Chief Economist of Swiss Re.
The shortfall in insurance relative to total economic losses from all disaster events – the protection gap – was $121 billion in 2016. Insurance coverage is not universal. For example, while a high-level of insurance penetration in New Zealand meant that households and business were well equipped to recover from the damage caused by the quake that struck the South Island in October 2016, in Japan's Kyushu Island only around 20% of the economic losses from the earthquake in April were covered by insurance.
And in Ecuador, the quake on the same day in April caused estimated economic losses of USD 4 billion, but insured losses of just $0.5 billion.
"In many parts of the world, insurance can play a much bigger role in helping households and communities recover from the losses and shock that disasters can inflict", Karl continues.