Total economic losses from natural and man-made disasters in 2016 were at least US$158 billion, according to a report from Swiss Re. This is significantly higher than the $94 billion losses in 2015 and was caused by large natural catastrophes, such as earthquakes and floods, according to preliminary sigma estimates.
Insured losses were also higher in 2016 at around $49 billion, compared to $37 billion in the previous year. However, the gap between total losses and insured losses in 2016 shows that many events took place in areas where insurance coverage was low.
Losses resulting from man-made disasters fell to $7 billion from $9 billion in 2015. Globally, there were approximately 10 000 victims in disaster events in 2016.
Natural catastrophes accounted for $150 billion of the total economic losses in 2016. Insured losses from natural catastrophe events were $42 billion in 2016, up from $28 billion in 2015, but slightly below the annual average of the previous 10 years ($46 billion). Man-made disasters triggered an additional $7 billion in insurance claims in 2016.
Earthquake losses reveal schisms in insurance coverage needs
There were a number of major earthquakes across the world in 2016, for example in Taiwan, Japan, Ecuador, Italy and New Zealand.
Among the largest was the 7.0-magnitude quake that struck the Kumamoto prefecture in Japan on 16 April 2016, part of a series of strong shocks and aftershocks in the region. The quakes resulted in extensive structural damage, fires and collapsed buildings, and claimed 137 lives.
The total economic cost was at least $20 billion, of which $5.0 billion was insured. The Kumamoto quakes were the costliest disaster event globally of the year.
Later in the year, central Italy was struck by an earthquake in August destroying some small towns and killing 299 people.
There were other strong quakes in October which added to the destruction, but no loss of life.
Government sources estimate that the overall reconstruction cost for the August earthquake alone will be as high as $5 billion. Insured losses for that event, however, are only a fraction of the total, estimated at $70 million, mainly from commercial assets.
"Society is underinsured against earthquake risk," Swiss Re Chief Economist Kurt Karl says. "And the protection gap is a global concern. 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."
Widespread flooding in the US, Europe and Asia
Several large-scale flood events hit the US in 2016. The biggest was in August when heavy rains caused widespread flooding in Louisiana and Mississippi. The economic losses from this event totaled $10 billion, while private insured losses were at least $1 billion.
Europe and Asia also experienced heavy flooding. In Europe in late May and early June, two slow-moving low-pressure systems caused thunderstorms, flash floods and river flooding, with France and Germany hit the most.
The storms and floods led to total losses of $3.9 billion, and insured losses of $2.9 billion. In Asia, heavy rains throughout the year led to severe floods in China and other countries. According to public sources, total economic losses from flooding along the Yangtze River were at least $16 billion.