Monday, June 8, 2015
We’re reading a lot about the dangers of heat waves and drought.
Aon Benfield’s latest Global Catastrophe Recap report highlights the exceptional heat wave that impacted India from May 21-31, killing at least 2,500.
This is one of the highest death tolls on record for heat-related casualties, Aon notes.
The states of Andhra Pradesh, Telangana, and Odisha (Orissa) were worst affected by temperatures that reached 48.0˚C (118˚F) in several areas. Temperatures were so hot that roads literally melted in some areas.
An opinion piece in the New York Times over the weekend spoke more to the deadly risks of heat and humidity.
Closer to home the ongoing severe drought conditions across much of the Western United States, with a particular emphasis on California, continue to exact an economic toll.
Aon cites a study conducted by the UC Davis Center for Watershed Sciences on behalf of the California state government that concluded that total 2015 statewide economic losses from the drought will top $2.7 billion.
Including damage from neighboring states, the overall total loss will rise to at least $3 billion.
Heat waves and drought can cause losses in many lines of insurance, according to Munich Re. Many losses are unseen, and the result of secondary events, making it difficult to assess the extent of losses involved.
For example, losses to the agriculture industry can run into the billions of dollars in drought years as harvest failures lead to multi-peril crop insurance claims and livestock losses may result from shortage of feed and heat-related stress. Long dry periods also create ideal conditions for promoting the outbreak and spread of wildfires.
In 2011 Texas suffered a severe drought and overall and insured wildfire losses in that state were also the highest ever recorded, Munich Re explains.
Heat waves have also been linked to an increased risk of mortality and heat-related stress with the potential to impact health and life insurance.