Catastrophes cost global economy a record $350 billion in 2011
As 2011 draws to a close, insurers around the globe are hoping the worst will soon be over. According to preliminary estimates from Swiss Re’s sigma team, 2011 will be the year with the highest catastrophe-related economic losses in history, at $350 billion. This year would have been the costliest year even for the insurance industry if Japan had been more fully insured.
The figures released on December 16 found that total insured losses for the global insurance industry from natural catastrophes and man-made disasters reached USD $108 billion in 2011. This is more than double the figure of USD $48 billion in 2010. Claims from natural catastrophes alone reached USD $103 billion in 2011, compared to only USD $43 billion in 2010. The $350 billion in total losses eclipses 2010’s estimate of $226 billion.
Kurt Karl, Swiss Re’s Chief Economist, says: “2011 is going down as another year of very tragic and costly earthquakes. Unfortunately earthquake insurance coverage is still quite low, even in some industrialized countries with high seismic risk, like Japan. So on top of people losing their loved ones, societies are faced with enormous financial losses that have to be borne by either corporations, relief organizations or governments and, ultimately, taxpayers.
With approximately USD $108 billion in insured catastrophe losses, 2011 ranks as nearly the most expensive year for the insurance industry according to sigma records, second only to 2005 (USD 123 billion). Moderate hurricane losses have kept costs lower than in 2005, the year when hurricanes Katrina, Wilma and Rita alone caused claims of over USD $100 billion.
At more than USD $47 billion, earthquake-insured claims for 2011 are the highest ever recorded. Japan’s earthquake was the largest known – in terms of magnitude – to have ever hit the country, costing the insurance industry an estimated USD 35 billion. However, the insured losses were only a fraction of the total losses. Estimated to be at least USD 210 billion, the total economic losses are likely to be much higher once damage to nuclear facilities and disruption to worldwide supply chains are included. By way of comparison, the earthquake which hit New Zealand in February caused economic losses of USD 15 billion. However, thanks to high earthquake insurance penetration rates, particularly in residential properties, the insurance industry will pay most of the losses, said Swiss Re.
The most costly insured catastrophe losses in 2011 / Swiss Re
