Natural catastrophes caused $160-B damage

FRANKFURT, Germany – Natural catastrophes including US hurricane Sandy caused $160 billion worth of damage in 2012, the world’s leading reinsurer, Munich Re, estimated on Thursday, January 3.

“Last year, natural catastrophes caused $160 billion in overall losses and $65 billion in insured losses worldwide,” Munich Re said in a statement.

About 67% of overall losses and 90% of insured losses were attributable to the United States, with the year’s highest insured loss caused by Hurricane Sandy, with an estimated amount of around $25 billion, the reinsurer said.

In addition, the US was also hit by severe droughts, as well as tornadoes, it added.

Overall, global losses were significantly lower in 2012 than in the previous year, when record figures were posted due to the earthquakes in Japan and New Zealand and severe floods in Thailand, Munich Re continued.

In 2011, overall losses came to $400 billion and insured losses to $119 billion.

In terms of fatalities, about 9,500 people lost their lives in natural catastrophes last year compared with 27,200 in 2011 and a 10-year average of 106,000.

“The relatively small number of fatalities was due to the fact that, in 2012, few severe natural catastrophes occurred in emerging and developing countries, where natural catastrophes tend to have far more devastating consequences in terms of human lives,” Munich Re explained.

Hurricane Sandy made landfall on the east coast of the US on October 29.

While at that point, its maximum wind speeds were no more than 150 kilometres (94 miles) per hour, “it was an exceptionally wide storm, measuring 1,800 kilometres in diameter — one-and-a-half times as big as Texas — so that the losses extended over a vast area,” Munich Re said.

The second major loss event of 2012 was the summer-long drought in the US that plagued the Corn Belt in the midwest, where most of the US’s main agricultural crops, corn and soybean, are grown, Munich Re said.

Nearly half of US arable acreage was hit and overall agricultural crop losses in the US in 2012 totalled around $20 billion, “making it the biggest loss in US agricultural insurance history.”

Future challenges

In average years, insured losses are around $9.0 billion.

The head of Munich Re’s Geo Risks Research, Peter Hoeppe, said Hurricane Sandy and the drought “clearly demonstrate the type of events we can expect to contend with more often in the future.”

It was not possible to attribute individual events to climate change, he noted.

“However, numerous studies assume a rise in summer drought periods in North America in the future and an increasing probability of severe cyclones relatively far north along the US East Coast in the long term.”

The rise in sea level caused by climate change would further increase the risk of storm surge.

Munich Re board member Torsten Jeworrek said that the heavy losses caused by weather-related natural catastrophes in the US showed that greater loss-prevention efforts were needed.

“It would certainly be possible to protect conurbations like New York better from the effects of storm surges. Such action would make economic sense and insurers could also reflect the reduced exposure in their pricing,” Jeworrek said. – Rappler.com