Record Loss Reserves from September Weather Events. A Challenge for the Insurance Industry

The 2024 hurricane season has seen multiple record-breaking storms across the Pacific and Atlantic regions. Particularly in late September and early October, the world has witnessed extreme weather events (severe storms, floods, landslides) that caused significant property damage, heavily impacting global insurance and reinsurance companies. The losses from storms and floods in September have pushed loss reserves to record levels, creating pressure on major insurance markets.

Hurricane Helene, a Category 4 storm, made landfall in Florida on September 26, and spread to several states in the eastern U.S. (Georgia, North Carolina, South Carolina, and Alabama), causing extensive damage to infrastructure and wiping out many residential areas. With winds reaching up to 140 mph, strong winds combined with storm surges, heavy rainfall, and flooding left many areas paralyzed, washing away roads, causing landslides, power outages, and communication breakdowns, leading to severe losses. Estimates from Karen Clark & Company (KCC) suggest that insured losses from Hurricane Helene could reach up to $6.4 billion, including losses to residential, commercial, industrial properties, and vehicles.

While Europe was still reeling from the historic floods in Germany in June, widespread flooding caused by heavy rains (from Storm Boris) devastated Central Europe in mid-September, affecting Romania, Poland, the Czech Republic, Austria, Hungary, Slovakia, and Germany. Verisk estimates insured losses from this flood to range between $2.2 billion and $3.4 billion, primarily affecting residential buildings and businesses impacted by the floods. Notably, the extent of the damage was widespread, but the insured losses varied depending on the insurance participation rate in each country.

In Vietnam, Typhoon Yagi left severe consequences, with estimated insurance loss reserves reaching approximately VND 10 trillion (equivalent to $400 million), concentrated on infrastructure and technical assets. However, this is only a preliminary estimate, and the actual compensation by insurance companies may be lower after loss assessment and settlement processes are completed.

China also suffered significant damage from Typhoon Yagi, with total insurance loss reserves estimated at around $500 million.

These extreme weather events serve as a warning about the increasing frequency, severity, and unpredictability of natural disasters caused by climate change, demanding heightened vigilance from both the public and authorities. Vietnamese insurance companies will continue to collaborate with reinsurers to provide appropriate protection solutions for potential natural disaster risks in the future.