Losses caused by natural catastrophes in the first half of 2016, as reported by Munich Re recently, were significantly higher than the corresponding figures for the previous year, despite the total number of loss events being significantly lower. Total losses by the end of June came to US$ 70bn compared to the previous year being US$ 59bn for the same period. There were a total of 350 total loss events reported for the first half of 2016, compared to 510 for the same period in the previous year. The main loss events were powerful earthquakes in Japan and Ecuador, storms in Europe and the US, and forest fires in Canada.
Loss predictions for the full year 2016, as reported by PAL’s gamma risk engine, are forecast to be 1,005, 4% down on the 1,046 events reported for the previous year. In fact the number of loss events are indeed forecast to continue reducing 13% by 2019. Total losses are forecast to be US$ 196bn reducing to US$ 177bn in 2019.
Comparison of Predict Ability Ltd’s PALgamma model (with climate change, solid red line; without climate change, dotted blue line) with Munich RE’s disaster and catastrophe data. PALgamma predicted the number of events in 2015 (1060) within 1%. (© Predict Ability Ltd.)
Predict Ability Ltd (PAL) is committed to supporting the adoption of a universal and transparent carbon price. PALcarbon is a real-time carbon pricing and reporting system for clients that takes into account the real cost of damage caused by carbon emissions. PALgamma is a computing risk engine for forecasting extreme weather related disaster events and identifying the impact of man-made climate change. Predicting the Price of Carbon: How to tackle the climate change code for good is a recent publication that addresses the goals and strategies for tackling climate change.
Author: Edward Coe
Edward Coe is Managing Director and co-founder of PAL. He has extensive experience of systems development and implementation for advanced derivative trading systems utilising a broad range of technologies supporting in house, bespoke and third party software. Edward developed the software behind PAL Carbon.