Global economic losses of $42 billion and insured losses of $17 billion to the end of June were considerably below the average for the past 10 years, according to Munich Re’s 2014 Half-Year Natural Catastrophe Review. However, winter did hit hard.
The effect of loss susceptibility on claims was clearly demonstrated by two snowstorms in Japan. These storms in February, which hit Tokyo and central Japan in particular, brought insured losses of more than $2.5 billion, and were the most costly natural catastrophe worldwide in the first half of the year.
The record winter in North America also caused significant losses, with extremely cold temperatures and heavy snowfalls over a longer period in many parts of the United States and Canada. The losses from various blizzards totaled around $3.4 billion. The most costly snowstorm — in the first week of January — totaled $2.5 billion, of which $1.7 billion was insured.
“The harsh winter in the Midwest and on the East Coast once again exposed the vulnerability of infrastructure in the United States. In many cases, there were power outages for long periods, and economists estimate that the cold winter also contributed to negative economic growth in the first quarter,” said Tony Kuczinski, CEO and president of Munich Re America Inc. “Our industry and government must work together to encourage and facilitate greater investment in infrastructure projects that protect communities from loss. Consumers must be informed about the natural catastrophes they are exposed to; what they are or are not insured for; and how to protect their homes and businesses to withstand locally occurring natural hazards.”
There is a link between the weather extremes in the northern hemisphere this winter, said Peter Höppe, head of Munich Re’s Geo Risks Research Department. “These extremes with heavy winter conditions in North America and Asia, and the extraordinarily mild winter across large parts of Europe were due to significant and lengthy meanders in the jet stream,” he said. “And scientists are still having intense debates about whether such sustained changes to patterns in the jet stream and therefore also the frequency of such extreme and persistent weather conditions might increase in the future due to climate change.”
The U.S. tornado season, which peaks from May to July, has been below average so far. The National Oceanic and Atmospheric Administration recorded 721 tornadoes until end of June, in comparison to an average of 1,026 in 2005 to 2013.
As for hurricanes, Arthur, the first named storm of this year’s season, made landfall on July 4 on North Carolina’s barrier islands as a category 2 hurricane with wind speeds of reportedly up to 100 mph. North Carolina governor Pat McCrory has said there are minimal reports of damage.
As for the rest of 2014, Munich Re said weather events will probably see increasing impact from ENSO, a naturally occurring phenomenon that involves fluctuating ocean temperatures in the equatorial Pacific. “With the contrary effects of El Niño and La Niña, ENSO can influence weather patterns in many parts of the world,” said Höppe. “It currently looks as though a moderate El Niño will develop by the autumn, with warm water from the South Pacific moving from west to east, thus shifting wind systems and precipitation across the Pacific basin.”
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While hurricane activity in the northern Atlantic normally decreases during El Niño phases, the number of typhoons in the northwest Pacific usually increases, but they make landfall more rarely. And, tornado activity increases in the United States.
“This gives a different distribution of losses across regions,” said Höppe. “Globally, our loss database NatCatSERVICE records no significant differences in overall losses in moderate El Niño years when compared to neutral years, whereas losses are significantly lower in years with a strong El Niño.” The stronger the El Niño, the more likely it is that there will be a La Niña in the following year, when hurricane activity tends to increase, he said.
