2009 catastrophic events costly to insurers and society
ACCORDInG TO SWISS RE’S LATEST SIGmA STuDY, natural
catastrophes and man-made disasters claimed approximately 15,000
lives and cost insurers $26 billion in 2009. The overall cost to society
was $62 billion. Insured losses were below average owing to a calm u.S.
hurricane season.
On a worldwide basis, natural catastrophes cost insurers $22 billion
in 2009, while man-made disasters
cost an additional $4 billion. Insured
losses were highest in North America,
where they cost insurers over $12.7 billion. The death toll was the highest in
Asia, where nearly 9,400 of the world’s
15,000 catastrophe victims lived.
Insured losses in the region were approximately $2.4 billion.
insured losses
Comparatively low
Compared to previous years, 2009
was a low-loss year. According to the
Swiss Re study, Natural Catastrophes
and Man-Made Disasters in 2009, 133
natural catastrophes and 155 man-made
disasters occurred in 2009. Six events
each triggered insured losses in excess
of $1 billion. The costliest event was the
European winter storm Klaus, which
struck France and Spain in January and
led to insured losses of 2. 35 billion euros
(nearly $3.4 billion).
value concentration of wealth in loss-prone regions, and a trend toward more
insurance coverage. Global warming
and the related higher risk of extreme
weather conditions also contribute to
the trend.
“The probability that we [will] see
natural catastrophe losses as low as
those in 2009 is less than 35 percent.
We have already seen significant events
in 2010 with winter storm Xynthia in
Europe or the earthquakes in Chile
and Haiti,” says Thomas Hess, chief
economist of Swiss Re. “The industry
is therefore well-advised to prepare for
much higher losses. Given their high
volatility, losses could easily be three
to five times what they were in 2009. In
2005, insured losses set a record when
they soared to $120 billion. I would not
be surprised if this record is broken in
the not-too-distant future.”
secondary Perils
Most of the attention in recent years has
been focused on the primary perils—i.e.,
earthquakes, hurricanes, and winter
storms. However, many other natural
phenomena, referred to as secondary or
other perils, can also cause widespread
damage to property. The most prominent
secondary perils are flooding, landslides,
hailstorms, tornadoes, winter storms
outside Europe, snow and ice storms,
droughts, and bush fires. In 2009, more
than half of the natural catastrophe loss
burden was caused by secondary perils.
“Premiums from primary perils are
often used to cross-subsidize losses
from secondary perils. The risk is that if
premiums deteriorate, they can become
insufficient to pay for the sum of losses
caused by primary and secondary perils,” says Dr. Jens Mehlhorn, co-author
of the sigma study. “More advanced
probabilistic risk-assessment models
would help to better gauge and price the
risk of secondary perils.”
