$44 billion insured losses from catastrophes and disasters in 2013: Swiss Re

Reinsurance firm Swiss Re has estimated the total economic losses from natural catastrophes and man-made disasters in 2013 at $130 billion, resulting in a $44 billion insured loss toll for the global insurance and reinsurance industry.

The economic loss total of $130 billion compares with $196 billion in 2012. The insured loss total of $44 billion is far less than the insurance and reinsurance industry had to bear in 2012, when the insured loss total reached $81 billion.

Insured losses purely from natural catastrophe events in 2013 reached at least $38 billion, according to Swiss Re, down from $75 billion in 2012, while losses from man-made disasters totalled $6 billion this year which is similar to 2012’s figure.

On top of the financial toll from catastrophes and disaster loss events in 2013, the world saw around 25,000 lives lost as the human impact of these catastrophic events showed how it outstrips the economic and insured impact. 2012 saw lower loss of life at 14,000 despite the financial losses being considerably higher. This shows that the world still needs to put considerable effort into risk mitigation. Much of the death toll was due to typhoon Haiyan, which is estimated to have caused more than 7,000 deaths.

Flooding was a major driver of financial and insured loss in 2013, with the Central European floods this summer alone causing $18 billion of economic losses and around $4 billion of insured losses, according to Swiss Re’s estimates. That is higher than the 2002 floods in the same region which cost insurers around $2 billion.

Flooding in Alberta, Canada, caused insured losses of nearly $2 billion, the highest ever recorded in Canada for any disaster. There were also heavy rains and floods in Australia, India, China, Indonesia, Southern Africa and Argentina this year.

As well as the severe floods, hailstorm Andreas in Europe created a large insured loss this year. Hailstorm Andreas battered Germany and France in July, and caused around $3 billion of insured losses.

Windstorm Christian also impacted Europe causing another $1 billion of insured losses and Swiss Re says that windstorm Xaver is expected to cause a similar level of insured loss.

Kurt Karl, Chief Economist at Swiss Re, commented; “In many parts of the world, insurance penetration remains low. Together with preventative measures, insurance can lessen the destructive impact and financial burden that large catastrophic events can have on people’s lives. It can also help accelerate reconstruction efforts, as we have seen in areas where insurance penetration is higher.”

The top ten insured loss events of 2013 according to Swiss Re were:

1. European flooding in June – $4.1 billion insured loss, $18 billion of economic loss.
2. Hailstorm Andreas in July – $3.4 billion insured loss, $3.8 billion economic loss.
3. Canada floods in June – $1.9 billion insured loss, $4.8 billion economic loss.
4. U.S. severe thunderstorms and tornadoes in May – $1.8 billion insured loss, $3.2 billion economic loss.
5. U.S. severe thunderstorms, tornadoes and hail in March – $1.6 billion insured loss, $2.2 billion economic loss.
6. U.S. severe thunderstorms, tornadoes and large hail in May – $1.4 billion insured loss, $2 billion economic loss.
7. European windstorm Christian in October – $1.4 billion insured loss, $2.7 billion economic loss.
8. U.S. snow storm, ice, tornadoes, heavy rain in April – $1.1 billion insured loss, $1.6 billion economic loss.
9. European windstorm Xaver in December – $1 billion insured loss, >$1.4 billion economic loss.
10. Cyclone Osvald floods in Australia in January – $1 billion insured loss, $1.5 billion economic loss.

It’s telling that the most deadly natural catastrophe of the year, typhoon Haiyan does not feature in terms of insured loss despite causing 7,000 or more deaths. The insurance and reinsurance industry still has work to do on penetrating these harder to access markets and over time events like Haiyan will become drivers of significant insured losses.

It should be noted that these are preliminary estimates from Swiss Re’s Sigma department and subject to change before it publishes its report on 2013 natural catastrophe and man-made disaster losses, which is usually around March.