Natural catastrophes in 2020

This publication discusses how 2020 will be remembered for the global health and economic crisis triggered by COVID-19. Against the backdrop of the disruption and upheaval caused by the pandemic, millions of people also experienced severe weather events. In inflation-adjusted terms, global economic losses from natural and man-made catastrophes were USD 202 billion last year, up from USD 150 billion in 2019. The US was hardest hit, with large stretches of the East Coast pummelled by hurricanes, wildfires in the west, and the Midwest struck by a record number of convective storms. Australia suffered too, from unprecedented drought, wildfire and storms. Asia suffered deadly and catastrophic floods from monsoon rains.

The publication points to the still-existing need to close protection gaps in many areas of the world, for both primary and secondary peril exposures. This sigma looks at the interplay of different factors shaping secondary perils in particular. The re/insurance industry has long monitored primary perils and its modelling capabilities of the risks are strong. Often, however, secondary peril events are not fully monitored nor modelled. Given the rise of their associated losses, secondary perils need to be better understood for the purpose of more complete and accurate risk assessment. Damages and claims patterns also need to be monitored on a more granular level for detection of emerging trends, and there needs to be sharing of information, where legally permissible. Critically, the complex interplay of factors –natural world and socioeconomic – shaping secondary peril developments need to be further investigated and much better understood.