The 2014 natural catastrophes toll

The year 2014 has been mild on insurers. According to a study published by Munich Re, the cost of natural catastrophes has proved to be less important than in 2013 in both economic and human terms.

Economic toll

Hudhud cyclone, India © Indian Navy, CC BY 2.5 IN

The cumulated cost of the 2014 weather events totalled 110 billion USD, far less than the year 2013 (140 billion USD) and the average value of the last thirty years. The Hudhud category 4 cyclone that ravaged India and Pakistan in October is the most expensive catastrophe with 7 billion USD in economic damages.

In terms of insured losses, the winter storm that lashed Japan in February has been the most expensive event for the insurance companies with 3.1 billion USD to their charge.

Confirming the general trend, the hurricane season in North America has been relatively mild. The cold wave that hit Canada and Eastern United States in January has been the biggest disaster with 3.7 billion USD in material damage, 2.3 billion USD of which to be borne by insurers.

Europe was not spared either in 2014, with a series of winter storms causing a total of 1.2 billion USD in economic damage and 890 million USD in insured losses.

Human toll

The year 2014 is the least deadly of the last ten years. With a total of 980 events, natural catastrophes have claimed the lives of 7 700 people, a toll well below the 21 000 deaths reported in 2013. Floods in India and Pakistan in September account for the most devastating events with 665 casualties.

The year 2014 shows, once again, the efforts exerted by the States to reduce the impact of natural catastrophes on the population and on infrastructure. In 2013, Haiyan, a category 5 typhoon, ravaged the Philippines claiming the lives of 6 000 people. In 2014, in the same region, Hagupit, a typhoon of the same category caused only 18 deaths because the government had launched the alert and evacuated more than 165 000 people before the cyclone started forming.

El Niño, a climatic phenomenon to dread

Despite the lower cost of natural catastrophes in 2014, an event that occurred during the year is worthy of special attention because its consequences are long term: El Niño.

The El Niño phase is characterized by a cyclical warming of the surface of the Atlantic Ocean which lasts between 12 and 18 months. This event, of a momentary nature in the past, has now become a global climate phenomenon that causes consequences noted around the world.

Changes in ocean temperature may, therefore, alter atmospheric pressure, and trigger increased rainfall in surrounding areas and a rise in temperature by the greenhouse effect. This phenomenon accounts for the torrential rains that fell in August 2014 in California after a long drought.

Peter Hoeppe, an expert in geographical risks at Munich Re, explains that if El Niño persists in 2015, it may affect hurricane season by increasing the frequency of tornadoes in the United States.

The year 2015 should therefore not be an easy one for insurers who, given the worrying trend of climate change, are in need of reviewing their contingency plans to anticipate unexpected events.

Major natural catastrophes in 2014
Damages in millions USD
DateEventCountryCasualtiesEconomic damagesInsured damages
Dec 2013 to February 2014
FloodsUnited Kingdom17NA1 700
2-14 January
Cold waveCanada, United States163 7002 300
7-16 February
Winter stormJapan375 9003 100
Flooding, flash floodingAfghanistan175--
2 April 2014
Earthquake of 8.2 magnitude and tsunamiChile6--
13-18 May
FloodsSerbia, Bosnia1284 500-
18-23 May
StormsUnited States-3 9002 900
3-5 June
StormsUnited States-1 6001 300
7-10 June
StormsFrance, Belgium, Germany63 5002 800
2-13 July
Typhoon NeoguriJapan3156-
11-22 July
Typhoon RammasunChina, Vietnam, Philippines2066 250-
3 August
Ludhiana earthquake of 6.1 magnitudeYunnan, China6176 000-
9-16 August
24 August
Napa Valley earthquakeCalifornia, United States-700150
3-15 September
FloodsIndia, Pakistan665--
11-17 September
Hurricane OdileMexico152 5001 200
11-18 September
Typhoon KalmaegiChina, Vietnam, Philippines4575-
11-13 October
Hudhud cycloneIndia, Nepal847 000530
1-12 December
Typhoon HagupitChina, Vietnam, Philippines18114-
Year 2014
DroughtCalifornia, United States-4 0001 500
Sources: Munich Re and Aon
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