Global reinsurance capital has now reached a record $575 billion, which includes more than $60 billion of deployed alternative capital, according to the latest reinsurance market report from Aon Benfield.

The reinsurance intermediary and capital advisory firm said that reinsurance capital last year went up by approximately $35 billion, or more than 6 per cent, while alternative capital deployed increased by 25 per cent. The figures were based on data up to and including the third quarter of the year.

While demand for property catastrophe reinsurance grew during 2014 at a slightly higher rate than previous periods, it was still outstripped by the increase in supply of catastrophe reinsurance.

Global insured catastrophe losses continued to fall in 2014 from the record peak of $132 billion (including government-sponsored programme payouts) in 2011, when earthquakes in New Zealand, and the earthquake and tsunami in Japan accounted for about two-thirds of insured losses.

By contrast, last year’s insured losses have been preliminary estimated at $39 billion.

Aon Benfield, in its Reinsurance Market Outlook report, notes that all natural disaster perils, including tropical cyclones, earthquake and flooding were either at or below their ten-year average last year.

The two exceptions were severe weather (convective storms) and winter weather.

“Severe weather events comprised roughly 48 per cent of the losses in 2014, primarily driven by billion-dollar events in the United States and Europe,” reported Aon Benfield.

For a second consecutive year, severe thunderstorm peril — which includes tornadoes, hail, and straight-line winds — was the costliest for the global insurance industry. Many of the heaviest losses were reported in the US.

“While much of the media attention is often focused on tornadoes, industry officials are quick to confirm that the majority of the losses resulting from thunderstorm claims are due to hail,” Aon Benfield noted.

“Assessors often report that hail stones ranging from pea-sized to as large as softball-sized can many times lead to a total loss that is costly for the insurer.

“Punctured roofs in homes, shattered windows and dented vehicles are the most commonly reported as hail falling from thunderstorm clouds can sometimes travel to the surface at speeds of up to 100mph (160kph).”

There has been a gradual uptick in severe weather insured losses in the US and parts of Canada, Europe and Australia since 1990.

Aon Benfield noted that the US remains in the midst of a record-setting stretch without a major hurricane landfall (Category 3 or above) since Hurricane Wilma in 2005.

Commenting on insurance market trends, the report said: “There is a real need, and real demand for new coverages to absorb risk from cyber liability, and other technology related risks — to say nothing of the reintroduction of terrorism risk. For the industry, however, these changes come at the perfect time, with a huge supply of risk capital available to partner on new growth opportunities.”