Last month is shaping up to be the worst April in five years for insurance losses due to natural disasters, according to a report by reinsurance broker Aon Benfield Group Ltd. Last month’s events included two major earthquakes in southern Japan, an earthquake in Ecuador, and severe storms with flooding in both the United States and Argentina. This has been the costliest April since 2011.
Japan reported the filing of nearly 70,000 non-life claims, with total insured losses expected to pass the $2 billion mark, according to the General Insurance Association of Japan. This would leave a gap of $8 billion dollars of uninsured claims. At least 66 people were killed and more than 4,000 were injured. News articles also report widespread structural damage to more than 25,000 homes, businesses, vehicles, and public facilities. Moreover, the earthquake caused major business interruption. Although Japan has historically suffered low insurance protection despite frequent earthquakes, industry sources indicate a gradual uptick in the economic-to-insured ratio.
A major 7.8 magnitude earthquake struck Ecuador’s northwest coast in mid-April, resulting in more than 650 fatalities and leaving at least 17,500 residents with injuries. While the total economic damages from the earthquake are expected to exceed $3 billion, insurance levels (and therefore insured losses) in the earthquake zone are projected to be low.
Five severe storm systems in the U.S. caused total aggregated economic losses estimated to exceed $4 billion with insurance losses beyond $3 billion. Economic losses in the greater Houston area alone are expected to exceed $1 billion due to flooding. In Argentina, torrential rains in April caused major flooding, causing expected agricultural losses of $1.3 billion.
Aside from the earthquake in Ecuador and the flooding in the United States and Argentina, there was also April flooding which occurred in Chile, China, Uruguay, Haiti, Russia, Saudi Arabia, Yemen, Oman, Uganda, Angola, Somalia, Ethiopia, India, and Afghanistan. The combination of heavy rainfall from two tropical disturbances and tropical Cyclone Zena resulted in flooding across several islands of the Fiji archipelago, killing two people.
In India, a severe heat wave killed at least 300 people when two states within India reached temperatures of 111 degrees Fahrenheit.
Insurance industry analysts suggest that the large differential between the economic and insured losses in global weather events such as these demonstrate opportunities for insurance carriers and reinsurance companies to work more closely with business and government entities around the world to reduce natural disaster losses through enhanced risk management techniques.
Note: All amounts in U.S. dollars.
About Insurance Expert Bill Hager
Bill Hager has extensive and substantive experience relating directly to reinsurance, including certification by AIDA Reinsurance and Insurance Arbitration Society, United States (“ARIAS-U.S.”) as an arbitrator for reinsurance and insurance matters
Click on the link to read more about Bill Hager’s insurance expertise in regard to reinsurance.
Material for this article was taken from a collection of industry sources relating to the subject.
In all of the general statements here, see the state law of the controlling jurisdiction. Every case is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.
This blog is provided for educational purposes only. It is not intended to provide legal advice or an opinion in regard to any topic discussed. The blog should not be used as a substitute for legal advice from a licensed attorney in your state.