Reinsurer Swiss Re has released preliminary estimates from its sigma division for the amount of insured losses that insurers and reinsurers will have to pay from both man-made and natural disasters in 2012. They estimate economic losses from natural catastrophes and man-made disasters will likely reach $140 billion in 2012 with the re/insurance industry being on the hook for $65 billion of the loss.
The primary cause of insured losses from disasters in 2012 was weather events in the U.S. in 2012, a change from 2011 when Asia-Pacific dominated much of the economic and insured loss due to the Tohoku earthquake in Japan and the flood event in Thailand. However, while insured losses are dominated by weather catastrophes in the U.S., deaths from disasters in 2012 will be dominated by other regions of the world with natural catastrophes alone responsible for 11,000 deaths in 2012 with Asia suffering the largest share.
2012 had a benign start to the year, according to Swiss Re, but hurricane Sandy and the U.S. drought has caused the insured loss total to near double before the end of the year. The totals are still moderate though compared to 2011 when insured losses reached $120 billion, however the $65 billion is still above the average of the last 10 years insured loss totals.
Of the $65 billion, $60 billion is attributed to the natural catastrophes and weather events while the remaining $5 billion is due to man-made disasters. The top five insured loss events are all U.S. weather events this year, with hurricane Sandy estimated at $20 billion to $25 billion being the largest insured loss event of 2012. The next largest loss event of the year was the U.S. drought which is estimated to have cost insurers $11 billion. Following that are two March and April severe storm and tornado outbreaks which are estimated to have cost $2.5 billion and $2.3 billion. Finally the July Derecho storm event in the U.S. is estimated to have cost insurers $2 billion.
Kurt Karl, Swiss Re’s Chief Economist, said; “Severe weather events continue to affect many parts of the world. Although insurance cannot bring back lost lives, many people and businesses can rely on financial relief from insurance cover, as is the case for the US. However, in large parts of the globe that are prone to severe weather events, people and businesses could increase risk-preparedness by eliminating underinsurance.”
Swiss Re will release a full sigma report detailing losses in the first quarter of 2013. You can read our article on their 2011 report here.
Like what you've read?
Sign up for our regular email newsletter and ensure you never miss any of the news from Artemis.