Fewer severe catastrophes and a quiet hurricane season in the North Atlantic in 2014 led to fewer losses from natural catastrophes compared with years prior, according to Munich Re, an insurance group with global operations covering reinsurance, primary insurance and international health business and headquartered in Germany. The most expensive event in terms of overall loss was Cyclone Hudhud in India, which generated about $7 billion in losses.
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Overall losses from natural catastrophes totaled $110 billion, of which roughly $31 billion was insured. This compares with $140 billion in overall losses from natural catastrophes in 2013, of which $39 billion was insured. The loss amounts were well below the inflation-adjusted average values of the past ten years (overall losses: $ 190 billion, insured losses: $58 billion), and also below the average values of the past 30 years (overall losses: $130 billion, insured losses: $33 billion), according to Munich Re.
The greatest losses in North America last year stemmed from the unusually cold winter, according to Munich Re. Heavy frost lasting for weeks in many parts of the USA and Canada, along with heavy snowfalls and blizzards, particularly on the East Coast, caused losses of $3.7 billion, of which $2.3 billion was insured.
At 7,700, the number of fatalities was much lower than in 2013 (21,000) and also well below the average figures of the past 10 years, 97,000, and 30 years, 56,000. The figure was roughly on a par with that of 1984. The most severe natural catastrophe in these terms was the flooding in India and Pakistan in September, which caused 665 deaths.
“Though tragic in each individual case, the fact that fewer people were killed in natural catastrophes last year is good news. And this development is not a mere coincidence. In many places, early warning systems functioned better, and the authorities consistently brought people to safety in the face of approaching weather catastrophes, for example before Cyclone Hudhud struck India’s east coast and Typhoon Hagupit hit the coast of the Philippines,” said Munich Re Board member Torsten Jeworrek. “However, the lower losses in 2014 should not give us a false sense of security, because the risk situation overall has not changed. There is no reason to expect a similarly moderate course in 2015. It is, however, impossible to predict what will happen in any individual year.”
On August 24, 2014, an earthquake in the Napa Valley in California close to the town of Napa served as a wake-up call to risks, Munich Re said. Napa lies within highly exposed, approximately 43-mile wide zone that has several known faults forming part of the greater San Andreas fault system. The earthquake had a magnitude of 6.0 and was therefore not extraordinarily strong for this region. Nevertheless, a large number of buildings were badly damaged. The economic loss amounted to $700 million, of which $150 million was insured. Many wine-processing machines were damaged and stocks destroyed, affecting many wineries and businesses in the Napa region. “The earthquake shows that the San Francisco region must prepare itself for bigger tremors too. However these cannot be predicted,” Peter Höppe, head of Geo Risks Research at Munich Re, added in the statement.
In all of 2014, 980 loss-related natural catastrophes were registered around the world, a much higher number than the average of the last ten and 30 years (830 and 640, respectively). According to Munich Re, broader documentation likely plays a role in this context, since—particularly in years with low losses—small events receive greater attention than was usual in the past.
While the costliest natural catastrophe of the year was Cyclone Hudhud, the costliest natural catastrophe for the insurance industry was a winter storm with heavy snowfalls in Japan, which caused insured losses of $3.1 billion, Munich Re said. More than nine out of 10 of the loss-related natural catastrophes were due to weather events. The hurricane season in the North Atlantic was the unusually quiet, but the tropical cyclone season in the eastern Pacific was characterized by an exceptionally large number of storms, most of which did not make landfall. One storm in the eastern Pacific, Hurricane Odile, moved across the Baja California peninsula in a northerly direction and caused a loss of $2.5 billion (of which $1.2 billion was insured) in Mexico and the southern states in the United States, according to Munich Re.
