Catastrophe Losses Lower than Average for 2012
Weather-related catastrophes in the United States, however, account for a larger-than-normal portion of global losses.
Insurance Networking News, January 4, 2013
Severe weather-related catastrophes in United States accounted for a larger-than-normal portion of global catastrophe losses in 2012, increasing to 67 percent from an average of 32 percent, and 90 percent of global insured losses, compared to an average of 57 percent, according to Munich Re.
Globally, natural catastrophe losses totaled $160 billion in 2012, and insured losses totaled $65 billion, which is significantly lower than those in 2011. The year's highest insured loss in 2012 was caused by Superstorm Sandy, estimated at $25 billion, Munich Re said.
“The heavy losses caused by weather-related natural catastrophes in the USA showed that greater loss-prevention efforts are needed,” said Torsten Jeworrek, Munich Re Board member. “It would certainly be possible to protect conurbations like New York better from the effects of storm surges. Such action would make economic sense and insurers could also reflect the reduced exposure in their pricing.”
In 2011, overall losses reached a record level of $400 billion, as did insured losses, which reached $119 billion. The 10-year average of for insured losses is $50 billion and $165 billion for overall losses, Munich Re said. Loss of life attributable to catastrophes was 9,500, down significantly compared with the 10-year average of 106,000, Munich Re said, which was due to fewer severe natural catastrophes occurring in emerging and developing countries, where they tend to have more devastating consequences in terms loss of human lives.
Superstorm Sandy accounted for $50 billion in overall losses and insured losses of an estimated $25 billion. Sandy devastated the Caribbean before making landfall in the United States; 80 people died in Haiti, Jamaica and Cuba and other Caribbean islands, and the death toll attributable to the storm totaled 210. Insured losses in Canada totaled $100 million.
“Sandy's flood wave hit New York with full force. Its coincidence with the spring tide was a most exceptional circumstance. But such aspects also have to be borne in mind when assessing risks relating to conurbations,” said Prof. Peter Höppe, head of Munich Re's Geo Risks Research.
The summer-long drought in the United States, which affected the Midwest and surrounding states, was the second major loss event of 2012, decimating agricultural production.
“Only in the Dust Bowl years, from 1934–1936, had yields been decimated by a worse drought,” Munich Re said. Crop losses in the United States totaled $20 billion in 2012; $15 billion to $17 billion was covered by the public-private multi-peril crop insurance program, making it the largest loss in U.S. agricultural insurance history. On average, insured losses are $9 billion. Tornadoes contributed significantly to losses in the United States, as well, causing $5 billion in losses, half of which were insured.
“These two catastrophes clearly demonstrate the type of events we can expect to contend with more often in the future,” Höppe said. “It is not possible, of course, to attribute individual events to climate change, each theoretically being possible in isolation. However, numerous studies assume a rise in summer drought periods in North America in the future and an increasing probability of severe cyclones relatively far north along the U.S. East Coast in the long term. The rise in sea level caused by climate change will further increase the risk of storm surge. And, with no apparent prospect of progress in international climate negotiations like those held recently in Doha, adaptation to such hazards using suitable protective measures is absolutely essential.”
Severe natural catastrophes in the Asia Pacific region declined significantly in 2012. In 2011 major earthquakes struck Japan and New Zealand and figured prominently in global loss statistics, Munich Re said. Typhoon Bopha caused more than 1,000 deaths when it struck the Philippines in December and was the most devastating natural catastrophe in terms of lives lost in 2011; insured losses however were minor due to the low insurance density.
In Europe, two earthquakes struck Italy's Emilia Romagna region in May 2012 and caused overall losses of $16 billion and insured losses of $1.6 billion.
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