US storms cause record insurance losses ” Swiss Re
Environmental Finance, 22 December 2005 – The series of hurricanes that battered the US in 2005 look set to make this year the costliest ever for companies offering insurance against natural and man-made catastrophes, according to preliminary estimates from Swiss Re.
Total insured property losses from catastrophes during the year currently stand at $80 billion ” almost 90% of which stemmed from storm, and storm-related flood damage, Swiss Re says. Meanwhile, total economic losses reached $225 billion.
The announcement follows a similar one from fellow insurance giant Munich Re at the UN climate change meeting earlier this month (see This year to be costliest yet for weather disasters ” Munich Re). Munich Re estimated that natural catastrophes alone led to insured losses of $70 billion and economic losses of $200 billion.
The single most costly event was Hurricane Katrina, which hit the US gulf coast on 24 August and cost insurers $45 billion. Hurricane Rita was the second most expensive ($10 billion) ” followed by hurricanes Wilma and Dennis ($8 billion and $2 billion respectively).
Before 2005, the single most expensive storm to date was Hurricane Andrew in 1992, which resulted in insured losses equivalent to $22 billion in today’s terms, and Swiss Re notes that there is a trend towards increasing losses.
It puts this down, in part, to “increasing population densities, higher concentrations of insured values, and construction activity expanding into areas with a high natural-perils exposure”. However, it also says that “the ongoing warm phase that has been measurable since the 1990s and the recent high hurricane frequency inspire little hope of this trend being reversed anytime soon.”
Nonetheless it was earthquakes that were responsible for the biggest losses of life during the year, Swiss Re says. The greatest death toll was caused by October’s earthquake in Pakistan, which claimed 87,000 victims, followed by an earthquake in Indonesia in March which killed 2,600.