AON: 2017 Natural Disasters Generate $353 Billion of Economic Loss

Aon Benfield's Weather, Climate & Catastrophe Insight: 2017 Annual Report reveals that 2017 had 330 natural catastrophe events that generated economic losses of $353 billion—of which 97 percent ($344 billion) was due to weather-related events, including Hurricanes Harvey, Irma, and Maria in the United States and the Caribbean, plus Typhoon Hato in China and Cyclone Debbie in Australia. For historical context, 2017's natural catastrophe losses were 93 percent higher than the 2000–2016 average.

Insured losses to the private sector and government-sponsored programs were among the most costly ever incurred, reaching $134 billion in 2017—just behind the record $137 billion in 2011. This number is 139 percent higher than last year's $56 billion, primarily due to high insurance penetration in the United States that suffered a very active Atlantic hurricane season, severe weather events (convective storms), and wildfires.

Eric Andersen, CEO of Aon Benfield, said, "While 2017 was an expensive year for the insurance industry, the reinsurance market had an estimated $600 billion in available capital to withstand the high volume of payouts. Most critically, the US weather and wildfire events in particular have demonstrated the value of reinsurance, with claims being paid in an average of 8 days to augment the recovery process."

Additional key findings include the following.

• The amount of economic damage from Hurricanes Harvey, Irma, and Maria that was insured was $80 billion (36 percent).

• Thirty-one billion-dollar events occurred globally, with sixteen alone in the United States.

• Wildfires caused $14 billion of insurance losses in 2017—the highest on record for the peril.

• Natural disasters caused 10,000 human fatalities, with the deadliest event being a massive landslide event in Sierra Leone, where more than 1,100 people lost their lives.

• Since 1880, 2017 was the third warmest year on record for combined land and ocean temperatures.

Steve Bowen, Impact Forecasting director and meteorologist, said, "The high cost of disasters in 2017 served as a reminder that we continue to face increasing levels of risk as more people and exposures are located in areas that are particularly vulnerable to major, naturally occurring events. As weather scenarios grow more volatile in their size and potential impact, it becomes more imperative than ever to identify ways to increase awareness, improve communication, and lower the insurance protection gap. We know natural disasters are going to occur. The question is, how prepared are we going to be when the next one strikes?"

Other significant events during the year include the following.

• An October wildfire outbreak, the most destructive ever recorded in the state of California, caused nearly $13 billion in economic damage.

• Substantial summer flooding caused more than $12 billion in damage across China.

• Southern Europe endured an extended drought during the summer and autumn months that caused $6.6 billion in damage across parts of Spain, Italy, and Portugal.

• Elsewhere in Europe, the costliest thunderstorm event of the year affected central sections of the continent, particularly Poland, and left a damage bill of nearly $800 million.

• In Mexico, two powerful earthquakes in September led to nearly $6.0 billion in combined economic losses, including major damage across Mexico City on the 32nd anniversary of its historic 1985 tremor.

For more information, read the full Weather, Climate & Catastrophe Insight: 2017 Annual Report. Current and historical natural catastrophe data, plus event analysis, are available on Impact Forecasting's Catastrophe Insight website. 

The table below reflects data regarding the 10 costliest global economic loss events of 2017. 

TOP 10 GLOBAL ECONOMIC LOSS EVENTS OF 2017

 Source: Aon plc, press release, January 24, 2018.