Aon Benfield put 2010 insured catastrophe losses at $38 billion

Aon Benfield has published their Annual Global Climate and Catastrophe Report for 2010 which reviews the natural disasters that occurred throughout the year and looks at the economic cost and the amount of insured losses which resulted from them.

The report shows that the incidence of natural catastrophes globally during 2010 was far higher than in the previous three years with Aon recording 314 separate events. Total economic losses for 2010 were $252 billion with the amount of insured losses coming in at $38 billion. As a comparison, 2009 saw $58 billion in economic losses and $20 billion in insured losses.

The difference between economic and insured losses this year was huge and can be attributed to so many disasters in areas of the world which are underinsured or uninsured. That divergence serves as a good indicator of the potential for new forms of re/insurance and microinsurance to provide cover in these hard hit, developing areas of the world.

Stephen Mildenhall, Chief Executive Officer of Aon Benfield Analytics, said: “Despite no major US event, global insured catastrophe losses in 2010 amounted to nearly double those seen in 2009. The most significant insured event – and one of the most significant ever outside the US – was the February 27 Chile earthquake. The reinsurance industry provided ample capacity to handle the Chile event, and local companies benefited from prudent catastrophe risk based capital requirements and adequate reinsurance protection. At year end 2010 reinsurer capital has grown to record high levels. Reinsurance supply will continue to outpace demand putting further downward pressure on rates at January 1 and ensuring that reinsurance remains a highly accretive, cost-efficient form of capital for our clients.”

Steve Drews, Impact Forecasting Associate Director and Lead Meteorologist, said: “The United States and South America were the dominant regions for insured losses in 2010, primarily due to damaging winter and springtime weather in the U.S, and the Chile earthquake in South America. Asia accounted for the majority of the economic losses, driven by flooding in Pakistan and China, while Haiti’s devastating earthquake also had little to no effect on global insurers and reinsurers. Had these large economic loss events occurred in areas with higher insurance penetration, 2010’s insured loss total would have been far greater.”

Steve Bowen, Meteorologist at Impact Forecasting, added: “While the U.S. saw three separate billion dollar insured loss events in 2010, the most interesting note is that none of the losses came as a direct result of a landfalling hurricane. Despite the 2010 Atlantic Hurricane Season being the third most active on record, there were no hurricane landfalls in the U.S. for the second straight year. The season also marked the fifth consecutive year that the U.S. has avoided a major hurricane strike, with the last being 2005’s Hurricane Wilma in Florida .”

The Chile earthquake remains the highest insured loss event of 2010 with $8.5 billion in losses. Aon Benfield have the New Zealand earthquake as the third most severe loss event at $3.05 billion, however that figure looks like to rise after Partner Re said that losses may reach $5.5 billion, if that happens then the annual global insured loss figure could end up being in excess of $40 billion.

The report also contains some really interesting reviews of the year for tropical storms, tornadoes in the U.S. and wildfire. It also looks at the outlook for 2011 for the global climate.

Download the full PDF report from Aon here.