Reinsurance: "Global insured catastrophe losses lowest for five years"

From Artemis:

Despite intense snowstorms in Japan, severe hail and windstorms in Europe, major flooding in parts of the UK and several aviation tragedies, global insured losses for 2014 were the lowest for five years, at roughly $33 billion, according to Guy Carpenter & Company, LLC.

The international risk and reinsurance broking specialist’s annual ‘Global Catastrophe Review’ report has recently been published, highlighting a significant drop in insured losses throughout 2014 from natural and man-made disasters.

Significant natural catastrophe insured losses 2011 to 2014 - Source: Guy Carpenter

The Americas, which includes the U.S. and Canada, contributed around 57% of the global insured loss figure, while Europe, the Middle East and Africa comprised roughly 21%, and Asia, Australasia regions fronted approximately 23% of the losses, according to Guy Carpenter’s study.

“Although insured losses for 2014 were among the lowest recorded in years, we still observed powerful impacts and significant losses from both natural and man-made catastrophes,” advised James Waller, Research Meteorologist at GC Analytics.

Interestingly, Artemis reported at the end of last year that Swiss Re’s sigma research unit had estimated 2014 global insured losses would reach $34 billion, while reinsurer Munich Re provided a global catastrophe insured loss figure for 2014 of just $31 billion.

Similarly, and again differing from Guy Carpenters review, Aon Benfield’s Impact Forecasting division recently reported that catastrophe insured losses for 2014 were 38% below the ten-year average, at $39 billion, also discussed by Artemis.

Regardless of varied totals from several of the world’s leading brokers and reinsurers it’s clear to see that whether at the high or low-end of estimates, 2014 was someway below previous years and long-term averages.

The low-level of catastrophe losses has of course been exacerbating the softening of catastrophe reinsurance pricing. With traditional reinsurers and insurers finding the levels of loss manageable, excess has built up which alongside growing alternative capital results in ongoing pressure on rates.

Of course, this is not a bad thing for anyone, except perhaps for traditional reinsurers who are more accustomed to higher margins on this catastrophe exposed business. Lower reinsurance costs ultimately benefit insurance consumers and force capital to be more efficient, something that ILS excels at....MUCH MORE