How Do Natural Disasters Affect Premiums?

How Do Natural Disasters Affect Premiums?

16 May 2016

Is it just us, or does the world seem to be getting more than its fair share of natural disasters lately? We thought we’d ask our resident experts whether recent natural disasters impact our insurance premiums.

For the record, a natural disaster is any event or force of nature that has catastrophic consequences, such as avalanche, earthquake, flood, bushfire, hurricane, lightning, tsunami, and volcanic eruption.

Surprisingly, according to Munich Re, 2015 saw the lowest global losses for many years of an estimated $US90 billion (against the previous year of $US110 billion) of which $US27 billion was insured. This does not take into account human loss or social disruption.

This would indicate that insurance premiums are not likely to increase directly although locally, if you are in a flood or cyclone exposed location, you will certainly be likely to be subject to higher premiums, higher excesses or restricted cover.