Cats cost industry $45bn in 2013 – Sigma

Cats cost industry $45bn in 2013 – Sigma

Natural Catastrophes cost insurers and reinsurers $37bn in 2013, according to a Swiss Re Sigma report.

Factoring in the minority of manmade catastrophes, the insurance industry paid out $45bn in claims, according to Swiss Re, down from $81bn in 2012.

That still fell far short of the $140bn global economic cost from catastrophe events in 2013, and $196bn in 2012.

"The total economic loss of Cyclone Phailin is estimated to be $4.5bn, with just a tiny portion covered by insurance," said Kurt Karl, Swiss Re's chief economist.

"The insurance industry can play a much larger role in helping societies deal with the fallout of disaster events, such as this and Typhoon Haiyan," said Karl.

The human cost amounted to around 26,000 lives lost in disaster events last year.

A chapter in the report on climate change claims that rising global temperatures are expected to lead to shifts in the frequency, intensity and duration of extreme weather events.

Rising temperatures are expected to lead to more frequent and severe extreme weather events in the future, said Swiss Re, without action contributing to ongoing upward trend of total losses.

The Sigma report cites the US Gulf coast, claiming the economic loss potential of climate change may rise to $21.5bn annually in the region by 2030.

"A number of cost-efficient adaptation measures are available, and these together could lower damages by 35%," said David Bresch, global head of sustainability at Swiss Re.

"Among the most attractive adaptation measures are beach nourishment, levees, roof cover retrofits and improved building codes," he added.

Improving risk prevention and avoidance, and disaster risk management measures can help build resilience to climate change, suggested Swiss Re

"So too can risk transfer solutions, by providing financial relief after a disaster has struck. Risk transfer does not stand in isolation: it is an integral part of any climate adaptation strategy," said the reinsurer.

Last year's economic cost fell far below the ten year-average of $190bn economic losses from catastrophe events.

Asia was hardest hit by natural catastrophes in terms of economic losses and victims, notes Swiss Re, led by November's Typhoon Haiyan in the Philippines.

Europe suffered the two most expensive natural disaster events in 2013, with large-scale flooding in central and eastern Europe in May and June, causing a $16.5bn economic loss and a $4.1bn insured loss.

Not long after, in late July parts of Germany and France were hit, this time by severe hailstorms, creating an insured loss total of $3.8bn, the largest ever hail event payout.

The single largest loss-event in North America was extensive flooding in the city of Calgary, Alberta and surrounding area following six days of torrential rain. The economic loss was $4.7bn and the insured loss was $1.9bn, noted the Sigma report.

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