Insurers warned catastrophes will be more frequent after being hit by record-breaking $135bn natural disaster bill

 
Oliver Gill
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Experts said snow in California had contributed to devastating brushfires (Source: Getty)

Global insurers were hit by the biggest losses on record during 2017, as a trio of hurricanes and other natural catastrophes cost the sector $135bn (£100bn).

Hurricanes Harvey, Irma and Maria, together with a devastating earthquake in Mexico took overall natural catastrophe losses to $330bn, meaning 41 per cent of the costs were covered by insurers.

And according to Munich Re, extreme weather events are likely to occur more frequently in years to come.

Overall losses (insured and uninsured) were the second-highest on record, eclipsed only by 2011 when the Tohoku earthquake in Japan led to costs of $354bn adjusted for today's exchange rates.

“This year’s extreme natural catastrophes show how important insurance is in absorbing financial losses in the wake of such disasters," said Munich Re board member Torsten Jeworrek.

Read more: RSA share price dips as it reveals impact of recent hurricanes

Insured losses were almost three times the historical 10-year average of $49bn per year. Meanwhile, overall losses were double the inflation-adjusted average of $170bn.

Some 50 per cent of 2017's losses stemmed from the US, compared with a long-term average of 32 per cent.

"A key point is that some of the catastrophic events, such as the series of three extremely damaging hurricanes, or the very severe flooding in South Asia after extraordinarily heavy monsoon rains, are giving us a foretaste of what is to come," said Jeworrek.

Because even though individual events cannot be directly traced to climate change, our experts expect such extreme weather to occur more often in future.

Hurricane Harvey was the costliest natural disaster of 2017, with losses of $85bn. Irma's insured losses totalled $32bn, Munich Re said.

Read more: Lloyd's insurer hit by fresh multi-million dollar catastrophe profit hit

Snow leads to fire? A US brushfire paradox

Californian brushfires in 2017 led to losses of $10.5bn, of which $8bn were shouldered by insurers.

Last winter’s heavy snow and rainfall in California actually fuelled this year’s devastating brushfire season, Munich Re experts said.

This is because, after a long drought, the precipitation had caused many plants to sprout and grow again. The summer heat turned this increased vegetation into a veritable matchbox, leading to severe brushfires that lasted well into December.

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