The world’s second-largest reinsurance company announced this week that natural catastrophe losses rose from $22.7 billion in 2009 to $31 billion in the first 11 months of 2010. Man-made disasters — notably British Petroleum’s Deepwater Horizon oil rig explosion and the ensuing oil spill — have spurred about $5 billion in claims. Florida residents will not be surprised to hear that hurricane losses this year have been relatively low, resulting in a less egregious increase in insurance losses than initially expected.
Still, the numbers are daunting, regardless of the company’s assertions that the figures are in line with the 20-year average. The increase in overall natural disaster losses was 34 percent. Total economic losses, though, of both natural and man-made disasters were more than three times higher: $222 billion versus 2009’s $63 billion. This year’s total may go up even further as the winter storm season in Europe — and, this week, on the East Coast of the U.S. — makes its mark.
The reinsurer attributes much of the increase to this year’s “notably higher than average earthquake losses.” The costliest disaster of 2010 was Chile’s February 2010 earthquake, with insured losses estimated at $8 billion. Insured losses from the earthquake in New Zealand this past September came to $2.68 billion, according to company estimates. The second-most costly disaster was the February windstorm that struck Europe: Xynthia may total $2,85 billion in insured losses.
The earthquake in Haiti — the natural disaster that has, so far, cost 222,000 lives — barely registered on the reinsurer’s cost scale. Neither are the floods in Asia — human cost: 6,255 — included. About 15,000 people died during Russia’s heat wave this summer, but the insured losses were low.
If it doesn’t make sense that events that resulted in almost a quarter of a million deaths don’t appear on the reinsurer’s list, think about what the report covers: insured losses. These are parts of the world where insurance, for social, economic or other reasons, is not commonplace. Almost 250,000 people are gone, taken from their families — families that have no redress.
Insured losses cannot even begin to give an accurate picture of the costs of 2010’s natural disasters.
Bloomberg Businessweek “Natural Catastrophe Losses Increase to $31 Billion” 12/01/10
Business Insurance “Catastrophe, Disaster Losses Increase 34% in 2010: Swiss Re” 11/30/10Share