Insurance Post

Major catastrophe losses on the rise

The number and severity of major catastrophes and the resulting insured losses are increasing, acco...

The number and severity of major catastrophes and the resulting
insured losses are increasing, according to the world's two largest
reinsurers.


Both Munich Re and Swiss Re suggested that global warming was likely to
make the situation worse, with Munich Re adding that a new El Nino was
likely to peak this year.


Comparing 1993-2002 with the 1960s, Munich Re said that the number of
major natural catastrophes was 2.6 times larger, at 70; inflation-adjusted
economic losses were 7.3 times higher at $550.9bn; and insured losses 13.9
times higher at $84.5bn.


"The insurance industry must be prepared to face new loss dimensions - due
also to global changes in the climate," said a Munich Re review of natural
catastrophes in 2002.


Meanwhile, a Swiss Re sigma study of natural catastrophes and man-made
disasters in 2002 said climate change would produce "an increasing number
of extreme weather events", mainly because of more rainfall. "The
increasing number of floods witnessed recently are consistent with
developments that climatologists expect to find in a warmer climate."


Swiss Re said, however, that refinements in assessing flood exposure held
out "the promise of considerable development potential for the insurance
industry".


It said that insured losses have risen over the past 30 years mainly
because of "the increase in insured values, their concentration in
highly-exposed areas and their high susceptibility to external
influences".


Swiss Re said that natural catastrophes cost non-life insurers $13.5bn in
2002, well below the $35bn of the previous year, but only slightly less
than the annual average in 1987-2001. The 2002 total included storm losses
of $6.7bn and $2.1bn of man-made losses. Floods cost insurers $4.1bn,
including $3.2bn from the severe flooding in Europe.


Munich Re put 2002 insured losses at nearly $13bn, compared with $11.5bn
in 2001, and economic losses at $55bn, compared with $35bn.


- In this month's Risk Focus supplement Professor Bill McGuire of the
Benfield Greig Hazard Research Centre highlights some little-known effects
of climate change.
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