2018 will be a year to forget for the global insurance market. In terms of catastrophe losses, this year will be the costliest ever for insurers, if current trends continue.
Data for the third quarter of the year shows a cloud is hanging over the insurance industry. During Q3, 2018, the United States was battered by several hurricanes. While Hurricanes Florence and Michael were not necessarily as potent as storms in previous years, the damage they caused was extensive.
Indeed, the two storms produced $31 billion in economic damages, with insurance companies due to take a big part of that burden. We reported last month that insurers may escape relatively unscathed from Hurricane Florence as some predictors point to much of the damage being caused to uninsured properties.
CoreLogic reports the uninsured flood loss was significant, at US$18.5 billion. Total damages from Florence are estimated at $28.5 billion
“The flood zone delineations are just wrong,” Enki Research analyst Chuck Watson told CNN. “But communities don’t like expansion of flood zones, because it makes development more expensive and difficult. So, the flood zones really don’t reflect the risk.”
In California, the wildfires that have erupted in recent weeks have caused devastating damage to infrastructure and are contributing to the worst wildfire season in the state’s history (32 blazes this quarter alone).
Other regions have not escaped cat events. For example, Asia has been affected by Typhoons Jebi and Trami, which both caused havoc in Japan. Typhoon Mangkhut brought its own damaging winds and rain to Southeast Asia.
“This has been a year in which the frequency of catastrophes seems potentially larger than last year,” RMS meteorologist and event response manager Tom Sabbatelli told The Financial Times. Assessing losses across 20 leading global insurers, The Financial Times says losses for those companies are at $9.1 billion for the third quarter.