Swiss Re have published a sneak preview of a forthcoming Sigma report which looks at catastrophe losses during 2009. Although there’s a month to go in the year Swiss Re say that barring any major loss events in December they expect insured losses for the full year of 2009 to be around $24b.
That’s less than half the insured losses calculated in 2008 and well below average. In 2009 total losses to society were $52b (with just $24b insured). Of those, $21b were insured losses from natural catastrophes and $3b were from man-made disasters. In 2008 total losses to society were a massive $267b.
While it may seem like it’s been a benign year, the first half of 2009 actually saw nearly double the average amount of claims the market would usually see. Winter storm Klaus in Europe was one of the largest events at $3.5b in insured losses demonstrating the need for the capital markets to provide windstorm risk transfer in this part of the world.
The main reason for the benign year though is the almost non-existent hurricane season that we’ve seen in the Atlantic. Today is the last day of the season and we’ve had no major landfalling U.S. storms and only really one that has caused much in the way of damage across the U.S. (where losses have the potential to be higher). Of course we cannot rely on that happening next year (and it most likely won’t) so it’s not advisable to lower coverage and reserves just because of one benign storm season.