September Storms Costly, But Not for Insurers

Aon Benfiled's Impact Forecasting says worldwide
catastrophes cost $15b, but insurers paid-out far less. 

By Mark E. Ruquet

Natural disasters around the world cost around $15 billion in economic loss during the month of September, but insurers covered a fraction of that, underscoring the lack of global insurance penetration, according to a recent catastrophe report.

Insurers paid out approximately $1.08 billion for insured losses in the United States, Mexico and New Zealand from storm damage and wildfires as the world suffered through an onslaught of heavy storm activity, according to a report from Impact Forecasting, the catastrophe modeler for Aon Benfield, the reinsurance broker and capital advisor for global insurance broker Aon plc.

“As our September catastrophe recap report highlights, tropical cyclone and flood events can simultaneously affect many countries around the world,” said Steve Jakubowski, president of Impact Forecasting. “Due to varying degrees of insurance penetration, a large strain is place on governments in certain regions to provide sufficient disaster relief funding and resources.”

Suffering the worst losses in a single country last month was Mexico as Hurricanes Manuel and Ingrid struck the East and West coasts within 24 hours, resulting in extensive damage and close to 200 dead or missing. Ingrid, which struck the shores of the Gulf Coast of Mexico on Sept. 13, took 23 lives and damaged or destroyed at least 10,000 homes. Official put the economic loss at more than $1.5 billion and insured losses at $230 million.

Manuel, striking the Pacific coast Sept. 13 through the 20, was more costly in terms of lives and losses. Officials said at least 169 died or went missing and 35,000 homes damaged or destroyed. Disaster areas were declared in more than 300 municipalities from torrential rainfall that caused massive flooding. Estimates put economic loss at $4.2 billion with insurers anticipating losses of around $685 million.

Here in the United States, flooding in Colorado and New Mexico from record rainfall from Sept. 9 to 16 killed nine people. The storm damaged or destroyed 20,000 homes and thousands of businesses, as well as substantial damage to infrastructure, with economic loss at around $2 billion, possibly more. The report notes losses to private insurers at about $150 million, but that figure does not include losses to the National Flood Insurance Program. However, officials have said many homeowners lacked flood insurance.

Aside from the flooding, the month saw a major wildfire in California and severe storms in Washington state and Oregon causing more than $10 million in economic damage.

Elsewhere, insurers in New Zealand expect to payout more than $12.5 million from damage caused by hurricane-force winds and flooding rains that swept across the islands. No injuries or fatalities were reported.

If insurance penetration had been more significant throughout Asia, global insurers would probably be looking at significant losses last month. Monsoon rains, tropical storms and earthquakes cost more than $4.5 billion in economic damage. The most significant event was Super Typhoon Usagi that hit China on Sept. 22 causing total economic loss of $3.8 billion, said the report. Capping off a wild month in storm activity in the region, Japan suffered several rare tornadoes between Sept. 2 and 4. The worst of six confirmed tornadoes was an F2 north of Tokyo between the cities of Saitama and Noda damaging or destroying hundreds of homes. Flooding from heavy rains affected close to 1,300 homes. Total economic loss was in the millions of dollars.