By: Luke Jones, Published on December 31, 2017 11:17 AM, Last Update on December 31, 2017 08:18 AM
Insurance loss from natural disasters in 2017 is closing the year at US$250 billion, according to AIR Worldwide, which is high above the global insured average loss of US$80 billion per year.
The firm compiled a damage bill that shows the annual assessment of insured losses has risen every year since 2012. AIR says the losses in 2017 have matched record losses from 2011. In its Global Modelled Catastrophe losses report, AIR says the following:
“2017 offers a powerful reminder that the insurance industry and other stakeholders must never be complacent,” the report notes. “After a decade of below-average losses (apart from the aforementioned 2011), 2017 will surely remind not just newcomers to the industry, but even those who have spent their careers assessing and managing catastrophe risk, that preparing for large losses before they occur is critical to continued solvency and resilience.”
Understanding and managing global disasters is hugely important, especially for businesses that work internationally.
“Understanding—and owning—this risk requires knowing both the likelihood of high-loss years and the diversity of events that could produce such losses,” the report continues. “In addition, companies with global exposures and an expanding global reach should prepare for the possibility that future catastrophes will produce losses exceeding any historical amounts.”
Underinsurance is a concern. For example, only 19% of economic losses through 2017 were insured: 9% of Asia’s economic losses insured, 14% of Latin America’s, 37% of Oceania’s and 38% of North America’s.
“Through the years, Asia has remained the region with the largest proportion of uninsured risk due to relatively low insurance penetration and, in some cases, nascent insurance markets,” the report adds. “However, a substantial insurance gap exists in the United States as well, especially in the areas of flood and earthquake.”