Munich Re Reports Natural Catastrophes Caused US$160bn Losses in 2012
Natural catastrophes, including floods, windstorms and earthquakes, caused US$160bn in overall losses worldwide in 2012, of which US$65bn were insured reports reinsurer Munich Re. The respective figures for 2011 were US$400bn and US$119bn.
The group commented that the US accounted for a higher proportion of global natural catastrophe losses than usual in 2012, due to a series of severe weather-related catastrophes. Some 67% of overall losses and 90% of insured losses were attributable to the US, against respective averages of 32% and 57%.
The year’s highest insured loss was caused by hurricane Sandy, with an estimated total loss of around US$50bn of which around half was insured. However, Munich Re added that the figures were still subject to uncertainty as the losses from Sandy were difficult to assess.
“The heavy losses caused by weather-related natural catastrophes in the USA showed that greater loss-prevention efforts are needed,” said Munich Re Board member Torsten Jeworrek. “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.”
The second major loss event of 2012 was the summer-long drought in the US that plagued the corn belt in the Midwest and surrounding states, where most of the main agricultural crops, corn and soybean, are grown. Until November, 2012 had been the US’s warmest year since records began in 1895. Even June and July largely failed to produce the usual rainfall. Only in the dust bowl years, from 1934-1936, had yields been decimated by a worse drought.
Nearly half of the US’s arable acreage was hit by the 2012 event. The overall agricultural crop losses in the US in 2012 totalled around US$20bn, of which about US$15-17bn is covered by the public-private multi-peril crop insurance programme, making it the biggest loss in US agricultural insurance history. In average years, insured losses are around US$9bn.
“These two catastrophes clearly demonstrate the type of events we can expect to contend with more often in the future,” said Professor Peter Höppe, head of Munich Re’s geo risks research. “It is not possible, of course, to attribute individual events to climate change, each theoretically being possible in isolation. 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 will further increase the risk of storm surge. And, with no apparent prospect of progress in international climate negotiations like those held recently in Doha, adaptation to such hazards using suitable protective measures is absolutely essential.”
Tornadoes also caused significant losses in the US, many squall lines forming in the spring due to a natural climate cycle. Overall losses from the most severe tornado outbreak, on 2-4 March, came to US$5bn of which 50% was insured. Tennessee was particularly badly hit.
There were far fewer severe natural catastrophes in the Asia-Pacific region in 2012, following a year when the major earthquakes in Japan and New Zealand had featured prominently in global loss statistics. Typhoon Bopha, which struck the Philippines in December, caused over 1,000 deaths, and many people are still unaccounted for. This storm was thus the year’s most devastating natural catastrophe in terms of lives lost, whereas insured losses were minor due to the low insurance density.
Two earthquakes that struck Italy’s Emilia Romagna region in May proved to be Europe’s costliest events. A series of earth tremors was recorded in the region to the east of Modena, in the period from May to July. The worst earthquakes, which had magnitudes of 5.9 and 5.8, struck on 20 and 29 May. Many of the region’s buildings, including historic monuments, were destroyed, and a large number of businesses located in this rural region’s numerous small industrial estates were damaged. Overall losses from the two earthquakes totalled some US$16bn and insured losses US$1.6bn.