Perilous
Times
Natural disaster damages at record high in 2011
Reuters Jan 4, 2012 – 6:54 PM ET
A Japanese woman stands in front of her house destroyed by an
earthquake and tsunami in March 2011.
Natural disasters, led by catastrophic earthquakes in Japan and
New Zealand, cost a record US$380-billion in 2011, more than
double the figure for 2010 and triple the average for the past
decade, insurance experts reported on Wednesday.
Insurance industry losses from these disasters reached a record
US$105-billion in 2011, according to Munich Re, the world’s
biggest reinsurer.
The cost to insurers from the earthquake and tsunami in Japan in
March, which caused nearly 16,000 deaths, was estimated at
US$35-billion to US$40-billion, the company said in its annual
review of the prior year’s natural disasters.
That equaled the insured cost of all the natural disasters to
strike the United States during the year, it said.
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An earthquake in New Zealand in February added a further
US$13-billion to insurers’ claims payout for the year, Munich Re
said.
Global economic losses from natural disasters were two-thirds
higher than in 2005, when Hurricane Katrina and its aftermath
devastated parts of the U.S. Gulf states.
While monetary costs were high in 2011, fatalities worldwide were
extremely low, at 27,000, compared to 296,000 deaths from natural
disasters in 2010, Munich Re said in an online briefing.
The vast majority of deaths — 15,840 — occurred in Japan in the
earthquake and tsunami that slammed Fukushima. Landslides and
floods in Brazil claimed 1,348 lives, Tropical Storm Washi killed
1,257 in the Philippines, floods and landslides cost 813 lives in
Thailand and 604 people were killed in an earthquake in Turkey.
The quakes in Japan and New Zealand together made up about half of
last year’s total insured losses from natural catastrophes,
exceeding the previous record of US$101-billion set in 2005.
Munich Re compares losses in original dollars, and not adjusted
for inflation.
“Normally, it is the weather-related natural catastrophes that are
the dominant loss drivers,” Munich Re said.
In the United States, 171 events produced US$35-billion in
economic losses. Nearly US$26-billion of that came from
thunderstorm events, shattering the previous record by more than
US$10-billion.
Among those storms were tornado outbreaks in April and May that
rank among the 10 largest U.S. weather disasters ever.
The Insurance Information Institute said that if taken as a whole,
and adjusted for inflation, the 2011 spring tornado season was the
fourth-costliest disaster in U.S. history, trailing only
hurricanes Katrina and Andrew and the Sept. 11, 2001, attacks on
the United States.
Despite the heavy payouts, many observers say that the claims were
not big enough on their own to provide a broad boost to
reinsurers’ pricing strength relative to their insurance company
clients, because reinsurers still have plenty of excess capital.
The seeming disconnect between the high financial cost and
comparatively low human toll is because the two worst disasters
occurred in places with “high insurance penetration,” where a
large percentage of people and property are covered by insurance,
Munich Re’s Ernst Rauch said.
“When it comes to the monetary impact of disasters, not only the
events themselves matter,” Rauch said. “What really matters is
where they happen, in which environment in terms of insurance
penetration and wealth.”
There were 820 natural catastrophes in 2011, about average for the
past 10 years but significantly higher than the 30-year average of
630 events per year.
“At least part of this increasing frequency in number of
weather-related natural disasters is driven already by climate
change,” Rauch said. The natural patterns known as El Nino and La
Nina also play a role, he said.
Munich Re’s figures differ somewhat from those of rival Swiss Re
published last month, which include man-made disasters in the
calculation.