Total global economic losses from natural disasters between 2005-2015 were more than USD1.3 trillion, with total direct losses in the range of USD 2.5 trillion since 2000. The series of major hurricanes and other natural disasters in 2017 made it the year of highest insured losses ever, at USD 138 billion. Overall economic losses from natural disasters in 2017 amounted to USD 340 billion – the second highest annual figure ever. According to Aon Benfield, the total economic losses from hurricanes in 2017 were nearly five times the average of the preceding 16 years, losses from wildfire were four-times higher, and losses from other severe storms were 60% higher. The claims burden disasters in 2017 has had material financial impacts for non-life insurers, with industry Return on Equity dropping from 11% in 2016 to -4% in 2017.
Recent analysis suggests that population expansion and urban development trends in high-risk areas “almost guarantees” that the cost of climate-related natural catastrophe events and associated claims will keep rising, irrespective of other factors. How does such a trend impact on the insurance industry? On the other hand, insurers’ capacity to write insurance business may be constrained by increasing physical risks to insured property and assets, if risk-based pricing rises beyond demand elasticity and customer willingness to pay. Shortly, climate change impact is an issue with numerous ramifications.
According to a IAIS paper, the main risks that industry has to cope with are:
The 15th edition of ICAR – The International Catastrophic Risks Forum will touch issues of paramount concern as the industry’s ability to cope with the evolving risk exposure to extreme weather events, impact of the NatCat risks on other business lines, as life or health insurance -, technology’s solutions to support both underwriting and loss adjustment activities in property insurance.