Tag Archives: Munich Re

Property losses from severe convective storms spark focus on resilience

More than $14 billion. That’s the expected insured loss from severe convective storms, thunderstorms, tornadoes, large hail and associated damaging winds in the United States in the first six months of this year.

From the Artemis blog, via Impact Forecasting, the catastrophe risk modeling center at Aon Benfield:

“The insurance and reinsurance industry faces more than $14 billion of losses after the first-half severe storm activity in the U.S., while the economic loss is set for $22 billion or higher, putting 2017 as the fourth most costly year for both economic and insured losses due to convective weather activity.”

Check out the U.S. tornado count, 2017 from NOAA:

An important message on building resilience from Munich Re, as reported by Business Insurance:

“Munich Reinsurance America Inc. has released a tornado virtual reality experience tool to highlight the risks posed by tornadoes and the importance of embracing resiliency in building construction to help reduce future property losses.”

And:

Many building codes in the United States do not require a home to withstand more than a 90-mph gust of wind for three seconds, which is the equivalent of a weak EF1 tornado with wind speeds between 86 to 110 miles per hour.

Get Insurance Information Institute facts and statistics on tornadoes and thunderstorms here.

Get serious about the lightning threat from the Insuring Florida blog.

 

Thunderstorms Most Costly U.S. Nat Cat in H1 2016

Severe thunderstorms accounted for the lion’s share of U.S. natural disaster losses in the first half of 2016, according to Munich Re.

Of the $17 billion in U.S. economic losses ($11 billion insured) caused by natural catastrophes in the first half of 2016, some $12.3 billion ($8.8 billion insured) were due to a series of storms in Texas and neighboring states, including destructive hailstorms in Dallas and San Antonio, and severe flooding in the Houston metro area.

Winter storms and cold waves were the next most costly U.S. peril in the first half causing insured losses of $1.5 billion, followed by flood and flash flood events with $1 billion in insured losses.

Wildfire, heatwaves and drought resulted in minor insured losses, and there were no losses due to earthquake or tropical cyclones in the first half, according to Munich Re’s Nat Cat Update.

USNatCatLosses2016H1MunichRe

Weather extremes in Texas and other southern states are symptomatic of an El Niño phase, which intensifies the subtropical jet stream, which can cause an increase in severe storms in the region, Munich Re said.

Further north, El Niño conditions also caused warm and dry conditions in Alaska and western Canada, helping to trigger the worst wildfire in Canadian history. Direct losses from these fires totaled $3.6 billion, of which $2.7 billion were insured.

The Fort McMurray fire has been declared the costliest natural catastrophe event in Canada’s history.

One beneficial aspect of El Niño conditions is that it tends to reduce springtime tornado activity over the southern Great Plains. While the year’s thunderstorm season got off to an early start, the states of Texas, Oklahoma, and Kansas have all seen about 50 percent fewer tornadoes this year than in the first half of 2015, Munich Re observed.

Nationally, the number of observed tornadoes was about 700 by the end of June, significantly below the average of 1,021 for the last 10 years.

Tony Kuczinski, president and CEO of Munich Re America, Inc, noted that homes and businesses incur the brunt of thunderstorm losses.

“Property damage from this spring’s thunderstorm season remind us that a roof is a building’s first line of defense against hail and wind events. Proper roof maintenance, roofing materials and installation are all critical to helping reduce these types of losses.”

To help homeowners build safer, stronger structures in the face of increasing severe weather events, Munich Re and the Insurance Institute for Business and Home Safety (IBHS) recently launchd an app that walks homeowners, contractors and architects through the home strengthening process.

FORTIFIED HomeTM On the Go can be downloaded free from the iTunes Store.

U.S. natural catastrophes accounted for almost one quarter of worldwide economic losses in the first half of 2016, and about 58 percent of global insured losses.

U.S. Winter Storm Losses Mount

As my kids head off for their snowy-themed day at camp, the statistic that jumps off the page in the 2015 Half-Year Natural Catastrophe Review jointly presented by Munich Re and the Insurance Information Institute (I.I.I.) is the record $2.9 billion (and counting) in aggregate insured losses caused by the second winter of brutal cold across the Northeastern United States.

As Munich Re illustrates in the following slide, a total of 11 winter storm and cold wave events resulted in 80 fatalities and caused an estimated $3.8 billion in overall economic losses in the period from January 2015 to the end of winter:

USNatCatLosses2015

But the $2.9 billion in insured losses goes higher still when you factor in 2014’s contribution to winter storm losses.

As Munich Re America notes in a press release, if the harsh U.S. winter of 2014/15 is taken as a whole, then the insured losses rise to $3.2 billion and overall economic losses to $4.3 billion.

And this figure does not include indirect losses due to delayed flights, power failures and business interruptions.

As Tony Kuczinski, president and CEO of Munich Re America, says:

The fact that, once again, tens of thousands of people were temporarily left without electricity shows that the U.S. simply must invest in stronger, more weather resilient, infrastructure.”

And when you consider that losses from snow, ice, freezing and related causes typically cost insurers between $1 billion and $2 billion annually, as noted by Dr. Robert Hartwig, I.I.I. president, the impact of the exceptionally cold winter of 2014/15 really starts to bite.

P/C Industry Financials and the Catastrophe Factor

The presence or lack of catastrophes  is a  defining event when it comes to the financial state of the U.S. property/casualty insurance industry.

At the 2014 Natural Catastrophe Year in Review webinar hosted by Munich Re and the Insurance Information Institute (I.I.I.), we can see just how defining the influence of catastrophes can be.

U.S. property/casualty insurers had their second best year in 2014 since the financial crisis — 2013 was the best — according to estimates presented by I.I.I. president Dr. Robert Hartwig.

P/C industry net income after taxes (profits) are estimated at around $50 billion in 2014, after 2013 when net income rose by 82 percent to $63.8 billion on lower catastrophe losses and capital gains.

P/C profitability is subject to cyclicality and ordinary volatility, typically due to catastrophe activity, Hartwig noted.

In 2014, natural catastrophe losses in the United States totaled $15.3 billion, far below the 2000 to 2013 average annual loss of $29 billion, according to Carl Hedde, head of risk accumulation, Munich Re America.

Lower catastrophe losses helped p/c industry ROEs in 2013 and 2014, relative to 2011 and 2012, and helped the p/c industry finish 2014 in very strong financial shape, despite the impact of low interest rates on their investments, Dr. Hartwig noted.

PCROE_major_event

 

Overall industry capacity, as measured by policyholder surplus, is projected to have increased to $675 billion in 2014 — a record high.

The industry’s overall underwriting profit in 2014 is also estimated at $5.7 billion, on a combined ratio of 97.8.

Underwriting results in 2014 and 2013 were helped by generally modest catastrophe losses, a welcome respite from 2012 and 2011 when the industry felt the effects of Hurricane Sandy and record tornado losses, Dr. Hartwig noted.

Matthew Sturdevant of the Hartford Courant has a good round-up of the other webinar presentations here.

 

 

 

 

Munich Re: Economic Recovery Drives Global Premium Growth

Global insurance markets are seeing stronger growth, thanks to the economic upswing in many industrialized countries, according to an annual study by Munich Re.

Munich Re’s Insurance Market Outlook 2014 finds that rate increases in a number of high volume markets are also having a positive effect on premium growth.

At the global level, Munich Re expects real overall growth in primary insurance premiums at 2.8 percent this year and 3.2 percent in 2015, influenced mainly by stronger growth again in life insurance.

[In 2013, global insurance markets saw restrained growth of 2.1 percent in real terms, with primary insurance premiums in the life insurance segment growing by just 1.8 percent, due to a number of regulatory one-off effects.]

While in recent years dynamic growth in emerging countries has served as the decisive growth driver of global premium volumes, especially in property/casualty insurance, Munich Re notes that it is the industrial countries whose contribution to growth is currently increasing.

Many emerging countries are currently experiencing a cooling of their economies, and this is expected to have a dampening effect on premium growth in 2014 and 2015.

In the long-term however, Munich Re expects that emerging countries will continue to become more important for the global insurance markets.

The emerging Asian countries will see the highest increases, with their share of global premium volume expected to rise by 5 percentage points, from 9 percent in 2013 to 14 percent in 2020.

The Chinese market, already the fourth-largest primary insurance market with premium volume of over ┚ ¬210 billion in 2013, will more than double by 2020 to become the third-largest market worldwide, according to Munich Re.

2013 Nat Cat Losses Below Average

Of the five costliest natural catastrophes for  the insurance industry  in 2013, only  two were U.S. events, though neither ranked first or second, according to Munich Re.

In its 2013 Natural Catastrophe Year-in-Review Webinar jointly presented with the I.I.I., Munich Re noted that hailstorms in Germany in July actually caused the highest insured losses of the year. This was also the insurance industry’s most expensive hail event in German history, costing $4.8 billion in overall  economic losses,  of which  $3.7 billion was insured.

Flooding in Europe in June was the  second most costly natural catastrophe for the insurance industry in 2013, causing insured losses of $3 billion, though overall economic losses from this event totaled $15.2 billion, making it the costliest natural catastrophe of the year in terms of economic losses.

With not a single storm of hurricane strength reaching the U.S. mainland during a quiet Atlantic hurricane season, the most serious natural catastrophe in the U.S. in 2013 was a series of  very severe tornadoes  in Oklahoma, according to Munich Re.

On May 21 a  tornado of the highest category (five), with wind speeds over 300km/h devastated the suburb of Moore. The overall economic loss resulting from the squall line totaled $3.1 billion, of which $1.8 billion was insured. This was the third most costly natural catastrophe for insurers in 2013.

In a year in which insured losses from natural catastrophes in the U.S. totaled $12.8 billion – far below the 2000 to 2012 average loss of $29.4 billion (in 2013 dollars), it’s interesting to note that insured losses from thunderstorm events exceeded $10 billion, despite the lowest observed tornado count in a decade.

Munich Re  reported that average insured thunderstorm losses have increased sevenfold since 1980.

Overall, Munich Re said economic losses from natural catastrophes worldwide in 2013 amounted to around $125 billion and insured losses  around $31 billion. These were both below the 10-year averages of $184 billion and $56 billion, respectively.

While floods and hailstorms caused double-digit billion-dollar losses in central Europe, in the Philippines one of the strongest cyclones in history, Supertyphoon Haiyan, resulted in a human catastrophe with over 6,000 fatalities, Munich Re added.