Munich Re – Fewer Severe Natural Disasters in the First Half of the Year; Overall Losses Below the Average

Munich Re, one of the world’s leading providers of reinsurance, primary insurance and insurance-related risk solutions, has reported fewer severe natural disasters in the first half of the year, making overall losses below the average.

The first half of 2018 was fortunate in that natural disasters across the world caused significantly lower losses than usual, the company said in a statement. According to provisional figures, overall losses were around US$ 33bn, the lowest level since 2005 (US$ 29bn after adjustment for inflation).

However, individual events did cause high losses for those concerned, for example crop losses in the agricultural sector as a result of drought in Europe.

The company warned that it is the second half of the year that usually brings higher losses. For example, in 2017 the series of major hurricanes, Harvey, Irma and Maria, pushed overall losses for the year to US$ 340bn.

The statement mentions two significant flood events for the period: storms across central Europe during May and June, and Cyclone Mekunu that hit Oman in May, where initial estimates suggest overall losses could amount to several hundred million dollars, with about a third of these insured.

Overall losses from the storms in central Europe in May and early June came to around €1.6bn, with insured losses of at least €900m. Munic Re noted that losses caused by severe thunderstorms are rising in Germany.

Winter Storms and Cold Weather 2018

Munic Re said that windstorms and cold weather in Europe and North America during the winter months feature prominently in the statistics for the first half of the year.

The most destructive event was Storm Friederike, which swept across the United Kingdom, northern France, the Benelux states and Germany in mid-January.

Between the end of February and mid-March, North America was hit by several widespread snowstorms, known locally as “nor’easters”.

In total, winter losses in Europe came to €3.9bn (US$ 4.8bn), of which €2.9bn (US$ 3.6bn) was insured. The winter in North America caused overall losses in the first half of the year totalling US$ 3.8bn and insured losses of US$ 2.7bn.

Thunderstorms and Drought in Europe

An unusual weather pattern developed in central Europe in May and early June. In the south and west of Germany, as well as in France, a series of very slow-moving thunderstorms formed in warm, moist air masses, triggering flash floods in many places. The flooding was caused by torrential rainfall that the storm sewers were unable to cope with. Overall losses from the storms came to around €1.6bn, with insured losses of at least €900m.

On the whole, losses caused by severe thunderstorms are rising in Germany – even after taking increasing values into account. While windstorm and hail losses enjoy a high level of insurance coverage, the share of insured losses from flash floods is usually well below 50%.

At around the same time, northeast Germany, Denmark, parts of Poland, Scandinavia, the Baltic states and the Balkans were experiencing very high temperatures and extremely dry weather. One result of this is that the grain harvest will be very poor in many of the affected regions. Many places fear downturns in yields, or even total losses, but the loss amounts can only be determined after the crops have been harvested.

Climate Change Attribution

The reason for both these phenomena was a stable weather pattern featuring a blocking high-pressure area over Scandinavia and an expansive low-pressure system stretching from western to central parts of Europe. Areas of central Europe recorded the warmest May since 1881, having just experienced the warmest April as well.

Ernst Rauch, Chief Climate and Geo Scientist at Munich Re, explained the background: “Although individual events like these cannot be attributed to climate change, climate model studies show that one future effect of the increase in temperature will be more frequent periods of heat and drought, along with more intensive convective rainfall. So these weather processes roughly fit the pattern that may be expected more frequently in future as a consequence of climate change.”

Major Volcanic Eruption in Guatemala

In Guatemala, more than 100 people were killed, with many more still missing, after a deadly eruption of the volcano Fuego. In the eruption, pyroclastic flows rolled down the sides of the 3,700 metre high volcano. The clouds of ash and boulders have a temperature of several hundred degrees and can reach speeds of well over 100 km/h.

Oman Hit by Extremely Powerful Cyclone

At the end of May, Oman was hit by the strongest tropical cyclone ever registered on the Arabian peninsula. On 25 May, Cyclone Mekunu made landfall close to Salala, the Sultanate’s third-largest city, with speeds of 185 km/h, making it a Category 3 storm (the third-highest category) on the Saffir-Simpson scale. The cyclone also brought an enormous volume of rainfall: in the space of three days, there was between 300 and 600 mm of rainfall, equivalent to the average amount over four to eight years.

According to initial estimates, overall losses could amount to several hundred million dollars, with about a third of these insured. Thirty people were killed.