Natural disaster insurance payouts double after highest losses for four years
Devastating earthquakes and powerful storms meant insurance firms forked out $50bn (£41bn) to settle disaster claims in 2016.
The settlements were almost double the $27bn paid by insurers in 2015, according to an annual review by reinsurance behemoth Munich Re.
Globally, an average of just 30 per cent of losses were covered by insurers meaning total losses for the year reached a whopping $175bn, the highest level for four years.
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However, according to Torsten Jeworrek of Munich Re the total losses were in the "mid-range". The inflation-adjusted average annual losses over the last 10 years are $154bn, with $45.1bn paid out by insurers.
Least deadly
Furthermore, 2016 saw the second fewest number of fatalities as a result of natural disasters for 30 years.
Around 8,700 lives were lost. Since 1986, the only year in which fewer lives were lost was 2014, when there were 8,050 fatalities.
River and flash floods were particularly prevalent during the year, accounting for 34 per cent of overall losses, as compared to a 10-year average of 21 per cent.
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With 70 per cent of losses uninsured during 2016, the so-called "insurance gap" remained consistent with previous years.
“The high percentage of uninsured losses, especially in emerging markets and developing countries, remains a concern," said Jeworrek.
The NatCatService database figures highlighted the tendency for Asian countries to shy away from insuring against natural disasters.
East-west divide?
The costliest single catastrophe was in Japan in April when two earthquakes hit the southern island of Kyushu. The total bill for this event was calculated at $31bn, of which 81 per cent of the cost was uninsured.
A 7.0 magnitude earthquake hit Japan in April 2016 (Source: Getty)
China gave proportionally an even more costly example. Devastating floods in June and July cost $20bn, but because only a fraction of the losses were insured (two per cent), insurers only needed to pay out $0.3bn to settle claims.
The US and Caribbean have a tendency to take out more cover but it is Europe where the majority of losses are often covered.
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The fifth largest catastrophe noted was as a result of flash flooding in Germany and France in May and early June. This led to total losses of $6bn, over half of which (53 per cent) were covered by insurers, meaning firms paid out $3.2bn in compensation.
(Source: Munich Re)
North America was hit by the most loss occurrences in 2016 since 1980, with 160 events recorded. The year’s most serious event there was Hurricane Matthew which killed 550 people and incurred losses of $10.2bn – around a third of which were insured.