The Catastrophic Losses of 2018

Last year, the United States experienced the top three largest natural catastrophes in the world with overall losses. The three most significant events were the California Wildfire, Hurricane Michael, and Hurricane Florence. The United States sustained 14 significant weather- and climate-related disaster events in 2018. According to the National Oceanic and Atmospheric Administration (“NOAA”), the overall damage from weather-related catastrophes and climate disasters reached approximately $91 billion.[1]

Similar to the 2017 review of weather-related and climate damages, a significant portion of the losses in 2018 were a result of weather- and climate-related changes. In 2018, the United States experienced record-high precipitation while parts of the country dealt with severe droughts.[2] Last year the United States experienced over 34 inches of precipitation—making it the most precipitation it has had in the past 35 years.[3] The United States also experienced exceptional drought in the Southern Plains area, which contributed to fire-related disasters.[4]

NOAA emphasized that the largest disasters have “higher potential uncertainty values around the loss estimates due to less coverage of insured assets[.]”[5] Not surprisingly, these events have given rise to a large number of claims, some of which raise complex coverage issues. In the wake of these major events, 2018 brought in a push for legislative reform. For example, the Disaster Recovery Reform Act of 2018 aimed to build the country’s capacity for disaster response and recovery by authorizing additional funds to assist in wildfire and windstorm disaster mitigation.[6] 

The California Wildfire has been recorded as the “costliest and deadliest” wildfire in the United States—with over 18,500 buildings being destroyed and burning over 450,000 acres of land. According to NOAA, the destructive fire caused approximately $24 billion in damages. 

Hurricane Michael brought devastating losses to the southern Mid-Atlantic States, North Carolina, and South Carolina. As the third category 4 storm to hit the United States since 2017, Hurricane Michael brought sustained winds of 155 mph and resulted in estimated costs of approximately $25 billion. Hurricane Florence also hit part of the Carolinas with sustained winds of 100 mph. Most of the damages were a result of the significant rainfall that caused severe flooding. The total damage is estimated to be approximately $24 billion. 

The California Wildfire gave rise to insured losses totaling over $11 billion.[7] Hurricane Michael resulted in over 140,000 insurance claims exceeding $6 billion in insured losses.[8] Some reports noted that Hurricane Florence cost insurers approximately $8 billion.[9] Although total losses and insured losses from natural catastrophes dropped significantly in 2018 as compared to 2017, the number of total losses and insured losses from natural catastrophes in 2018 was still double the inflation-adjusted 30-year average of losses from such events.[10] The total insured losses from natural disasters dropped to $91 billion from $306 billion in 2017. While the amount of losses decreased in 2018, the increasing number of weather-related and climate-related events over the last few years continues to be a cause for concern for both policyholders and insurers.

Posted by Hanna Kim

[1] Billion-Dollar Weather and Climate Disasters: Time Series, National Oceanic and Atmospheric Administration,
[2] Addressing the U.S. Climate in 2018: Warm Temperatures and Significant Precipitation Round Out 2018, National Oceanic and Atmospheric Administration,
[3] Id.
[4] Rebecca Lindsey, Intense drought in the U.S. Southwest persisted throughout 2018, lingers into the new year, National Oceanic and Atmospheric Administration (Feb. 6, 2019),
[5]Billion-Dollar Weather and Climate Disasters: Time Series, National Oceanic and Atmospheric Administration,
[6] Disaster Recovery Reform Act of 2018, FEMA,
[7]Insured Losses from Last Year’s California Wildfires up to $11.4B, Insurance Journal (Jan. 28, 2019),
[8]Steven Meyerowitz, Florida Insurance Regulator Reports Hurricane Michael’s Claims Now Exceed $6 Billion, (Mar. 21, 2019),
[9] Brian Sullivan and Katherine Chiglinsky, Hurricane Michael’s Cost: $25B With up to $8B in Insured Losses, Claims Journal (Oct. 12, 2018),