2011 natural catastrophes and man-made disasters to cost insurers $108 billion

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Swiss Re have released their preliminary estimate of insured losses resulting from natural catastrophes and man-made disasters occurring during 2011. Swiss Re’s sigma team estimate the total insured loss at $108 billion with natural catastrophes contributing $103 billion of that, well up on the $43 billion experienced during 2010.

Total economic losses from these events during 2011 has hit a record of $350 billion, a huge increase from 2010 which saw $226 billion in losses. The earthquake in Japan is the main event which accounts for the huge leap in economic losses. More than 30,000 people lost their lives due to catastrophes in the first 11 months of 2011, with the majority of those being in Japan.

Kurt Karl, Swiss Re’s Chief Economist, said; “2011 is going down as another year of very tragic and costly earthquakes. Unfortunately earthquake insurance coverage is still quite low, even in some industrialised countries with high seismic risk, like Japan. So on top of people losing their loved ones, societies are faced with enormous financial losses that have to be borne by either corporations, relief organisations or governments and, ultimately, taxpayers.”

2011 has seen the second highest insured loss total on record, with only 2005 seeing a higher figure at $123 billion. Swiss Re says that had Japan been more fully insured then 2011 would likely have been the highest year of insured losses on record. Also, had the U.S. hurricane season seen more landfalling storms, that could have taken the insured loss total higher towards the record, in 2005 hurricanes contributed claims of over $100 billion to the total.

Additional and developing claims from the flooding in Thailand and the potential for claims from European windstorms during the final weeks of December could bring the insured loss total higher to the record once the final figures are released at the end of the year.

Details of the ten most costly insured catastrophe loss events during 2011 can be found in the table below:

Insured losses ($B)Date (start)EventCountry
1$35B11.03.2011Earthquake MW9.0 & tsunamiJapan
2$12B22.02.2011Earthquake MW6.3New Zealand
3$8B to $12B27.07.2011FloodsThailand
4$7.3B22.04.2011Severe storms, tornadoesU.S. (Alabama et al)
5$6.7B20.05.2011Severe storms, tornadoesU.S. (Missouri et al)
6$4.9B22.08.2011Hurricane IreneU.S. et al
7$2.3B09.01.2011FloodsAustralia
8$2B03.04.2011StormsU.S.
9$1.5B08.04.2011StormsU.S.
10$1.4B14.04.2011StormsU.S.

On earthquakes, which by far contributed the largest proportion of the economic losses, Swiss Re says that they contributed $47 billion of insured losses with Japan alone costing the insurance industry $35 billion. The Japan quake alone is estimated to have resulted in $210 billion of economic losses with that figure likely to rise once the impact to nuclear facilities and supply chain disruption is better understood. As a comparison, the New Zealand quakes cost $15 billion in economic losses $12 billion of which was insured, showing that the insurance industry loss from Japan could have been so much higher had earthquake insurance penetration had greater uptake.

We’ll update you in January when full insured and economic loss figures for 2011 are released.

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