The difference in insurance penetration between the developed and developing world was fully illustrated in August, as the first hurricane striking the U.S. Gulf Coast since 2008 is expected to cost insurers more than two major typhoons that struck China, according to a report from Aon Benfield.
The reinsurance broker’s catastrophe modeler, Impact Forecasting, released its August Global Catastrophe Recap report summarizing cat events for the month.
There were seven tropical cyclone events causing significant damage, the report says.
Hurricane Isaac, which mostly impacted New Orleans and parts of Mississippi, struck the region as a Category 1 storm on Aug. 28 and 29, making landfall twice. The report says the storm claimed a total of 41 lives—seven in the United States and the rest throughout the Caribbean.
While it is still too early for exact figures, the report says economic losses are expected to be in the single-digit billions of dollars. Insured-loss estimates are “still in their infancy” and it is still too early to say whether insured losses will approach the $2.3 billion sustained from 2008’s Hurricane Gustav, which had a similar path to Isaac.
Catastrophe modeler AIR Worldwide issued an estimate that insured losses could reach as high as $2 billion.
By comparison, there were two typhoons that struck China—Typhoon Damrey and Typhoon Haikui—that the China Insurance Regulatory Commission says amounted to insured losses of $354 million.
The most costly, Typhoon Damrey, caused economic damage of $3.28 billion, and insured losses of $124 million. Typhoon Haikui caused more than $2 billion in economic loss and $230 million in insured loss.
“August witnessed a series of costly cyclone events globally, which have highlighted not only the disparity in risk management procedures between countries, but also the relative levels of insurance penetration,” says Steve Jakubowski, president of Impact Forecasting, in a statement. “Taking Typhoon Damrey in China as an example, the insurance cover may be in the region of three percent of the resultant total economic losses. This is very low compared to the United States, where we expect insurance cover for wind for Hurricane Isaac to be much higher.”
Another tropical cyclone, Typhoon Bolaven, killed at least 20 people when it struck South Korea and produced losses expected to exceed $177 million. Insurance estimates for agriculture and auto claims are expected to come in at about $106 million.
Other natural catastrophe events in the United States during the month included wildfires and severe weather from thunderstorms and hail.
Elsewhere in North America, insurers suffered hundreds of millions of dollars in losses from severe weather in Canada. Hail produced from a storm on the 12th damaged thousands of homes, businesses, vehicles, power lines and trees, primarily in Calgary.
Tropical Storm Helene and Hurricane Ernesto struck the Caribbean and Mexico. Damage estimates are unknown for Hurricane Ernesto, but amount to $17 million for Tropical Storm Helene. No insured loss figures were given.