Last year, global insurance companies were facing the lowest costs since 2009 from claims related to storms earthquakes and other natural catastrophes, the world's biggest reinsurance company has said in a report.
Germany-based reinsurer Munich Re published its annual Natural Disaster Review on Monday claiming "El Niño" had helped reduce global insurance costs from natural catastrophes in 2015. The climate phenomenon is caused by the warming of waters in the Pacific Ocean prompting changes in rainfall patterns.
Insured losses in 2015 came in at $27 billion (24.7 billion euros) last year, the company said, as El Niño had hampered the development of hurricanes in the North Atlantic, which traditionally cause some of the heaviest claims for the insurance industry.
In 2014, insurance claims totaled $31 billion, Munich Re said, which was also below the 10-year average of $56 billion. According to the company's data, some 23,000 people were killed in 2015, many in the Nepal earthquake in April. The total compared with 7,700 the previous year, but was well below the 10-year average of 68,000 per year.
The costliest single event for the insurance industry was a series of winter storms that hit the northeastern United States and Canada in February. They generated insured losses of $2.1 billion and total losses of $2.8 billion.
Peter Höppe, the head of Munich Re's Geo Risks Research Unit told reporters that the world's biggest reinsurer was "somewhat fortunate" in 2015.
"Strong tropical cyclones frequently only hit sparsely populated areas or did not make landfall at all," he said.
Reinsurers act as a financial backstop to insurance companies, paying a chunk of the big claims for storms or earthquakes in exchange for part of the premium. Lower claims payouts boost insurance industry profit but have a downside for reinsurers, whose insurance company clients then demand lower prices for reinsurers' backing.
According to British reinsurance broker Willis Re, prices continued to fall for contracts taking effect at the start of 2016 and that predictions of an end to the multi-year decline had proved illusory.
"The January renewals have unfortunately confounded the hopes of commentators that the market was reaching a pricing floor," Willis Re Chief Executive John Cavanagh told the news agency Reuters.
In the meantime, Munich Re has warned that the El Niño effect might be reversed this year due to its twin sister, La Niña, which usually fosters hurricane activity in the North Atlantic.
The company's natural disaster review also showed that overall economic damage, including losses not insured by companies, fell to $90 billion last year from $110 billion in 2014 - again well below the 10-year average of $180 billion. Munich Re is due to report its 2015 results on Feb. 4.
uhe/nz (AP, Reuters, dpa)