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Global disaster costs mark new records

Written by Sara Giordano

Natural and man-made disasters caused $136 billions of insured losses in 2017, the third highest on record 

(FT, 20 Dec): According to Swiss Re, the costs in 2017 more than doubled the 2016 figure and are well above the 10-year average of $58 billion (press release here) (figure 1). Extreme weather in the US in the second half of 2017 has been the main cause of the high number of full-year insured losses. Hurricanes Harvey, Irma and Maria caused $93 billon of insured losses, the highest figure since hurricanes Katrina, Rita and Wilma led to about $112 billion of insured losses in 2005. Munich Re reports similar figures, stating that the hurricane trio of Harvey, Irma and Maria will make 2017 year of highest insured losses ever. The final insurance bill is expected to top $135 billion. And overall losses, including uninsured losses, amount to $330 billion, the second-highest figure ever recorded for natural disasters (press release here, 4 Jan).

Figure 1: Insured losses from selected North American hurricane seasons, in USD$ billion at 2017 prices

The US National Oceanic and Atmospheric Administration (NOAA) said weather and climate-related disasters have costed the United States a record $306 billion in 2017, the third-warmest year on record. "In 2017, we have seen the rare combination of high disaster frequency, disaster cost and diversity of weather and climate extreme events," said Adam Smith, lead researcher at NOAA's National Centers for Environmental Information (CNN, 8 Jan).

The increase in climate-related disasters is likely to make barrowing more expensive. Bond rating agencies, such as Moody’s Investors Service and S&P Global Ratings, are looking at whether they should be including more disaster forecasting in calculating the credit ratings they assign to government debt and to companies (Bloomberg, 23 Jan).

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