Swiss Re : Institute estimates USD 83 billion global insured catastrophe losses in 2020, the fifth-costliest on record

• Natural catastrophes caused USD 76 billion of global insured losses, up 40% from 2019, mostly from secondary peril events such as severe convective storms and wildfires in the US

• Very active hurricane season with record number of named storms, but only moderate insured losses of USD 20 billion

• Losses from secondary peril events are forecast to increase, driven by climate change

Insurance industry losses from natural catastrophes and man-made disasters globally amounted to USD 83 billion in 2020, according to Swiss Re Institute's preliminary sigma estimates. This makes it the fifth-costliest year for the industry since 1970. Losses were driven by a record number of severe convective storms (thunderstorms with tornadoes, floods and hail) and wildfires in the US. These and other secondary peril events around the world accounted for 70% of the USD 76 billion insured losses from natural catastrophes¹. A very active North Atlantic hurricane season triggered an additional USD 20 billion of insurance claims, moderate compared to the record seasons of 2005 and 2017. The insurance industry covered 45% of global economic losses in 2020, above the ten-year-average of 37%.

Climate change is expected to exacerbate secondary peril events as more humid air and rising temperatures create more extreme weather conditions. These favour the onset and spread of events such as wildfires, storm surges and floods.

'As with COVID-19, climate change will be a huge test of global resilience. Neither pandemics nor climate change are 'black swan' events. But while COVID-19 has an expiry date, climate change does not, and failure to 'green' the global economic recovery now will increase costs for society in future,' said Jerome Jean Haegeli, Swiss Re Group Chief Economist. 'This year's natural disasters impacted regions with more insurance cover in place, providing vital support to the people and communities affected and enhancing their financial resilience.'

In the US, a record number of severe convective storms caused devastation throughout the year, likely leading to record annual losses in the country for this peril. Australia and Canada suffered significant losses from hail damage in 2020. In January, hailstorms in southeastern Australia caused insured losses of over USD 1 billion, while Canada experienced its costliest-ever hail event in Calgary in June, which led to losses of USD 1 billion.

Fires also contributed to secondary peril losses for insurers. Wildfires in the US from mid-August chiefly caused the high insured losses, though Australia's 2019 fire season, the longest and most destructive ever recorded, was still burning in early 2020. In the US states of California, Oregon and Washington State, more than 800 wildfires burned close to 6 million acres, destroying thousands of structures and triggering billions in insured claims. Although less than the record losses of 2018 and 2017, 2020 will be one of the costliest for fires.

Further secondary perils included severe floods in several provinces along the Yangtze River in China from May, causing industry insured losses of roughly USD 2 billion.