Swiss Re estimates that total insured losses rose 147% in 2011, putting the last twelve months second only to 2005 in the record books, while economic losses were the highest on record.
2011's largest catastrophes by insured loss and number of victims
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2010's largest catastrophes by insured loss and number of victims
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The reinsurer attributed a total of in $370bn economic losses globally to natural catastrophes and man-made disasters, and a $116bn loss to insurers in its recent Sigma report.
Kurt Karl, Swiss Re’s Chief Economist, said: “Last year saw extraordinary and devastating catastrophic events. The earthquakes in Japan, New Zealand, and Turkey, as well as the floods in Australia and Thailand, were unprecedented and brought not only massive destruction but also the loss of thousands of people’s lives.”
Japan’s magnitude 9 earthquake cost the insurance industry an estimated $35bn, which made it the most expensive catastrophe of its kind to hit the insurance industry.
It was, however, the subsequent tsunami which caused the majority of the damages, highlighting that secondary elements of catastrophes should not be overlooked.
As a direct result, Swiss Re established its own tsunami modeling hazard map.
Lucia Bevere, Swiss Re Senior Catastrophe Data Analyst and co-author of the study said: “Because Japan‘s earthquake insurance protection is very low, particularly for commercial properties, the insurance industry will bear only 17% of the total losses. Had Japan been more fully insured, 2011 would certainly have been the most expensive year ever also in terms of insured losses,”
The flooding in Thailand proved equally devastating, resulting in loss to insurers three times greater than any previous flood.
This, Swiss Re said, brought light to the point that floods can be just as damaging as earthquakes and cyclones and the exposure that emerging markets face.
“The size of the Thailand flood loss came as a shock to the insurance industry. Although Thailand had been known to be prone to flooding, less known was the large amount of exposure that had built up in Thailand in recent years of which most originated from foreign companies that had diverted their manufacturing operations there.” The sigma report said.
Swiss Re suggested that in order to preventing this happening in future, more insight is needed into emerging market to identify hidden ‘hot spots’.
Even with 325 recorded catastrophes and a challenging financial climate, however, Swiss Re said that the insurance industry as a whole performed well in 2011, and played a key role in the recovery from these disasters and delivering funds to rehabilitate businesses and communities.
But with a bill of almost $250bn being picked up by governments, relief organisations, and ultimately, individuals, Swiss Re said that 2011 exposed a lack of insurance protection globally.