Natural catastrophes in 2018: Increase in “secondary perils” loss

In mid-April 2019, the latest sigma report from the Swiss Re Institute has published a study on the natural catastrophes and man-made disasters in 2018.

The notion of “secondary peril” was introduced in it and defined as “independent small to mid-sized events, or secondary effects of a primary peril”.

The total global economic losses from natural catastrophes and man-made disasters in 2018 reached USD 165 billion. The insured losses covered by insurances reached USD 85 billion of global economic losses, within which 76 billion USD were due to natural catastrophes alone. The secondary perils stand for 60% of that amount thus nearly 46 billion USD.

2018 is the fourth year involving the highest insured losses in the last decade. It recorded 304 catastrophes which left 13 500 fatalities within which 9 800 caused by natural hazards.

The study aims at anticipating the aggravation of “second peril” damages which are likely to increase due to climate change and the concentration of populations in areas exposed to extreme weather conditions. In addition, secondary perils tend to be non-modeled, underestimated and are subject to a limited insurers’ follow-up.