Aon reported that losses were generated by 394 natural disaster events in 2018, with weather catastrophes driving the majority of losses. The Report evaluates the impact of global natural disaster events to identify trends, manage volatility and enhance resilience.
Of that total, private sector and government-sponsored insurance programs covered USD 90 billion of the total - the fourth-highest year on record. This means the protection gap, which is the portion of economic losses not covered by insurance, was 60 percent and at its lowest level since 2005.
The biggest driver of catastrophes in 2018 was the tropical cyclone peril following several significant landfalling storms. This included Hurricane Michael and Hurricane Florence (United States), Typhoon Jebi and Typhoon Trami (Japan), Typhoon Mangkhut (Philippines, Hong Kong, China), and Typhoon Rumbia (China).
As a result, 2017 and 2018 resulted in the costliest back-to-back years on record for both economic losses (USD 653 billion) solely due to weather-related events, and for insured losses across all perils (USD 237 billion).
"2018 was another active year for global natural disasters. While there was not a singular 'mega' catastrophe event, there were 42 billion-dollar events which aggregated to a slightly above-average year. The re/insurance industry continues to withstand the payouts backed up with USD595 billion of capital but focus on managing the cost of changing climate and weather events by helping to close the protection gap", said Andy Marcell, CEO of Aon's Reinsurance Solutions business.
Additional major events during the year included a series of major wildfires in Northern and Southern California. The costliest insured loss event of 2018 was the Camp Fire at USD 12 billion, which also became California's deadliest and most destructive fire on record.
Other significant regional events during the year included:
- October's Camp Fire in the US destroyed 18,804 structures, including most of the city of Paradise. Total economic costs were estimated to approach USD 15 billion. Overall insured losses from wildfires in California set a new record for the second year in a row.
- In Japan, torrential rains during the month of July led to catastrophic flooding across much of the country with total damage nearing US D10 billion.
- A multi-billion-dollar flood occurred in India's state of Kerala during the seasonal summer monsoon months.
- Much of Northern and Central Europe endured prolonged summer drought conditions as aggregate costs, mostly to agriculture, which tallied to near USD 9 billion. Multi-billion-dollar drought events also impacted the United States, Argentina, China, and India.
- A significant stretch of severe weather and flooding impacted Italy and Austria during October and November, as the economic toll topped USD 5 billion.
- Reaching USD 2.1 billion of insured losses, Windstorm Friederike was the fifth-costliest European windstorm of the 21st century.