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Canary Islands Volcanic Eruption to Cost Economy Hundreds of Millions of Euros

Aon plc has launched the latest edition of its monthly Global Catastrophe Recap report...

...which evaluates the impact of the natural disaster events that occurred worldwide during September 2021.

 

The report reveals that the Cumbre Vieja volcano, located on the La Palma Island in the Canary Islands archipelago of Spain began a fissure eruption from several vents, and as of Oct. 5, resulting lava flows destroyed nearly 1,000 homes and large areas of infrastructure, including approximately 30 kilometers (18.6 miles) of roads. The event prompted evacuation of thousands of residents and will likely result in hundreds of millions of euros in economic losses. No fatalities were reported.

 

Hurricane Nicholas made landfall in Texas, in the United States, on Sept. 14 as a Category 1 storm. Days of heavy rainfall associated with the slow-moving cyclone prompted notable flooding and flash flooding across parts of Texas and Louisiana. Total economic losses were estimated at upwards of $1 billion. Less than half was expected to be covered by public and private insurance.

 

Also in the U.S., the Fawn Fire was ignited on Sept. 22 and burned thousands of acres (hectares) near the Shasta-Trinity National Forest in Shasta County, California. At least 185 structures were destroyed. For the season, California wildfires have left more than 3,600 structures damaged or destroyed with a multi-billion-dollar economic cost expected.

 

Michal Lörinc, senior catastrophe analyst for Aon’s Impact Forecasting team, said: “The ongoing eruption of the Cumbre Vieja volcano reminds the insurance industry of the challenges posed by non-modeled perils. While catastrophe model coverage has continued to grow, gaps remain in having a full set of modeled solutions to accurately assess various types of risk in all territories. Weather and climate perils often generate most headlines, but geologic or seismic risks remain worthy of heightened focus.”

 

Other natural catastrophe activity to have occurred in September includes:

 

  • Additional heavy rains swept across parts of central and eastern China throughout September and into early October. The seasonal death toll from flood-related incidents neared 400, with a combined economic cost approaching $30 billion.
  • Severe weather left damage across areas of Wisconsin, Illinois, Indiana and Michigan on Sept. 7. Large hail and straight-line winds caused most of the damage. Total economic losses were estimated at $315 million; most was insured.
  • Two episodes of severe weather, related to cut-off low-pressure areas, affected central and eastern Spain in September. The local insurance sector registered more than 17,000 filed claims due to the events.
  • Heavy rainfall associated with the second rainy season prompted notable flooding in Colombia during September. The hardest-hit departments included Antioquia, Norte de Santander, Bolívar, Cauca, Tolima and Córdoba. The National Unit for Disaster Risk Management (UNGRD) cited that nearly 6,000 homes had been damaged or destroyed in September alone.
  • More than 300,000 people across 13 states were affected in total during the seasonal floods in Sudan between July and September, according to the United Nations. Nearly 15,000 homes were destroyed and more than 45,000 more were damaged.
  • A magnitude-5.9 earthquake impacted the Australian state of Victoria on Sept. 22, causing minor but widespread damage to homes and businesses. The Insurance Council of Australia cited at least 1,700 filed claims; all but 4 percent were filed in Victoria. Another strong earthquake hit the Greek island of Crete on Sept. 27 and rendered more than 3,000 homes uninhabitable.

 

The report, available at http://thoughtleadership.aon.com/Documents/20210012-analytics-if-september-global-recap.pdf, aims to assist clients in navigating natural catastrophe volatility and help them make better business decisions.

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