Recent catastrophes such as hurricanes in the Caribbean and an earthquake in Mexico will cost the global insurance industry around $95bn (£72bn), Swiss Re has said, although it admitted that the estimates “are subject to a higher than usual degree of uncertainty and may need to be subsequently adjusted.”
The world’s second largest reinsurer said it alone faces losses of $3.6bn (£2.7bn) from the “extremely powerful” series of natural disasters that took place in the third quarter of this year.
Swiss Re said the two powerful earthquakes to hit Mexico last month will lead it to incur losses of around $175m, meaning most of its claims during the period came from hurricanes Harvey, Irma and Maria.
This has been one of the worst ever years for natural disasters, with insurers facing hundreds of millions in claims and many being forced to issue profit warnings. Reinsurers such as Swiss Re, which insure the insurers, are expected to be hit particularly hard.
Swiss Re chief Christian Mumenthaler said the recent catastrophes “have been extremely powerful” but that “we can support our clients when they need us most”, while chief financial officer David Cole said the group maintained “a very strong capital position and high financial flexibility to support our clients”.
Faced with such huge losses, the insurance sector is under immense pressure to help limit the damage caused by climate change as the world prepares for extreme weather to become the new norm.
Maurice Tulloch, Aviva’s chairman of global general insurance, told The Telegraph earlier this year that the frequency of severe events was increasing year on year. “I’m no longer having to convince people when I speak to them that we’re going to see more of these,” he said. “As an industry we’ve got a role to play, we have to act now.”
Swiss Re’s forecast come a day after Zurich Insurance Group said that Harvey, Irma and Maria would most likely trigger around $700m in claims during the third quarter.