Aon’s Chief Growth Officer, Rob Michael, on the big weather events of 2018 and the importance of good resilience planning for all UK businesses
2018 was a big year for natural disasters. From the devastation of Hurricane Michael and Hurricane Florence in the US, to Typhoon Jebi in Japan, and extensive flooding in China and India, Aon’s ‘Weather, Climate & Catastrophe Insight 2018 Annual Report’ has assessed the global economic cost at USD225 billion. From an insurance perspective, it was the fourth costliest year on record at USD90 billion, while 2017 and 2018 were the costliest back-to-back years for weather disasters.
Freeze, flooding and windstorms in the UK
Closer to home, drought played a part in Central and Northern Europe, leading to economic losses of USD9 billion but, despite our own long dry spell, it was freeze, flooding and windstorms that caused the biggest losses in the UK for 2018. Storm Emma and the ‘Beast from the East’ paralysed the country for much of February and March, causing insured losses in hundreds of millions. Eleanor and Friederike, two January windstorms, caused nearly USD3.0 billion losses for European insures, however, only two percent were incurred in the UK. In October, Storm Callum inflicted economic losses worth 10s of millions of dollars as thousands of UK businesses and householders were left without power following extensive flooding in Northern Ireland, Wales and western parts of the UK.
Understand the risk and uncertainty
As the Aon report confirms, the influence of climate change is becoming more identifiable as extreme weather events hit greater geographic areas. Every business should expect to see the impact of extreme weather on their operations grow in both size and frequency, which makes it all the more important that they take time to understand the risk and uncertainty from natural disasters, and build it in to their resilience planning.
Impact Forecasting's Weather, Climate & Catastrophe Insight: 2018 Annual Report
In its annual report, Aon's Impact Forecasting team evaluates the impact of nearly 400 natural disasters in 2018. The aim of the report is to help businesses, communities, governments and the re/insurance industry to identify trends, manage volatility and enhance resilience against the growing risks of natural catastrophes.
Key findings from the report include:
- 394 natural catastrophe events in 2018 generated economic losses of USD225 billion
- Insured losses reached USD90 billion – the fourth-highest year on record
- The protection gap, which is the portion of economic losses not covered by insurance, was 60 percent and at its lowest level since 2005
- The biggest driver of catastrophes in 2018 was the tropical cyclone peril
- 2017 and 2018 resulted in the costliest back-to-back years on record for economic losses USD653 billion)
- The costliest insured loss event of 2018 was the Camp Fire in the US at USD12 billion