Texas Storms Drive Up Catastrophe Losses in First Six Months of 2016

Economic losses caused by natural catastrophes in the first half of 2016 totaled $17 billion as compared to 2015 losses totaling $12 billion. The total includes insured losses of $11 billion as compared to $ 8 billion the prior year. Total worldwide losses during this period totaled $70 billion, with insured losses totaling $27 billion. This was significantly higher than the prior year’s first half losses totaling $59 billion, of which $19 billion was insured.

Natural catastrophes in the US caused almost a quarter of worldwide economic losses, and accounted for 58 percent of global insured losses.

Approximately $12.3 billion ($8.8 billion insured) of this was due to a series of storms in Texas and neighboring states, including destructive hailstorms in Dallas and San Antonio, and severe flooding in the Houston Metropolitan area.

Weather extremes in Texas and other southern states are symptomatic of an El Niño phase, which intensifies the subtropical jet stream, which can cause an increase in severe storms in the region. Further north, El Niño conditions also caused warm and dry conditions in Alaska and western Canada, helping to trigger the worst wildfire in Canadian history. Direct losses from these fires totaled $3.6 billion, of which $2.7 billion was insured.

One beneficial aspect of El Nino conditions is that it tends to reduce springtime tornadic activity over the southern Great Plains. Although the year’s thunderstorm season got off to an early start, the states of Texas, Oklahoma and Kansas have all seen about 50 percent fewer tornadoes this year than in the first half of 2015. By the end of June, the number of observed tornadoes nationally was about 700, significantly below the average of 1,021 for the last ten years.

However, El Nino conditions have now faded, explained Peter Hoeppe, Head of Munich Re’s Geo Risks Research Unit. “In the third quarter of 2016, the ENSO climate oscillation is expected to switch to a La Niña phase, which also has a major influence on global weather patterns. For example, La Niña tends to promote the formation of hurricanes in the tropical North Atlantic and a greater number of typhoons in the Philippines.”

The hurricane season in the North Atlantic also started early. In January, Hurricane Alex formed south of the Azores. The storm passed through the Azores at hurricane strength, but with minimal impacts. An additional three tropical storms have formed in the Atlantic so far in 2016, two of which made landfall in the US. However, both storms were relatively weak, causing only minor losses.

Natural catastrophe figures for the first half of 2016:

• Overall global losses were above the inflation-adjusted average for the last 30 years ($63 billion), but below the average for the last 10 years ($92 billion).
• Insured losses were in line with the inflation-adjusted average for the last 10 years and above the average for the last 30 years ($15 billion).
• 3,800 people lost their lives, significantly fewer than the previous year (21,000) and the averages for the last 10 and 30 years (47,000/28,000).
• The highest losses were caused by two earthquakes on the Japanese island of Kyushu in April ($25 billion, of which $6 billion was insured).
• Of particular note were a series of storms in the US and Europe, extreme forest fires in Canada, and the complete absence of typhoons in the northwestern Pacific.

Source: Munich Re