Swiss Re: Economic losses from disasters tripled since 2009
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Swiss Re press release
According to Swiss Re’s latest sigma study, worldwide economic losses from natural catastrophes and man-made disasters were USD 218 billion in 2010, more than triple the 2009 figure of USD 68 billion. The cost to the global insurance industry was more than USD 43 billion, an increase of more than 60% over the previous year. Approximately 304 000 people died in these events, the highest number since 1976.
In 2010, severe catastrophes claimed significantly more lives than the previous year: around 304 000 were killed, compared to 15 000 in 2009. The deadliest event in 2010 was the Haiti earthquake in January, which claimed more than 222 000 lives. Nearly 56 000 people died during the summer heatwave in Russia. The summer floods in China and Pakistan also resulted in over 6 200 deaths.
Natural catastrophes cost the global insurance industry roughly USD 40 billion in 2010, while man-made disasters triggered additional claims of more than USD 3 billion. By way of comparison, overall insured losses totalled USD 27 billion in 2009. Lucia Bevere, one of the study’s authors, says: “Insured losses were highest in North America in 2010, where they exceeded USD 15 billion. Despite very low hurricane losses due to the absence of hurricanes making direct landfall in the US, a series of lesser storms throughout the year resulted in this high figure.”
High earthquake losses
Earthquake losses accounted for almost one third of all catastrophe losses in 2010. The February 2010 earthquake in Chile and the September earthquake in New Zealand were the two costliest events in 2010, and led to insured losses estimated at USD 8 billion and USD 4.4 billion respectively. Overall natural catastrophe claims in 2010 were in line with the 10-year average due to unusually modest US hurricane losses and in spite of notably high earthquake losses.
Incidentally, earthquake losses for 2011 will also be above average as the total insured claims for the February 22 earthquake in Christ-church, New Zealand, are estimated to be between USD 6 billion and USD 12 billion. The massive Tohoku earthquake that struck Sendai, Japan on March 11 is also expected to trigger significant insured losses.
Balz Grollimund, one of the study’s authors, says: “Although no long-term trend of increasing global earthquake activity has emerged, the number of fatalities and insured losses from earthquakes are on the rise. The main reasons are population growth, the higher number of people living in urban areas as well as rising wealth and rapidly increasing exposures. Many of these rapidly growing urban areas are located in seismically active areas.”
Ten events each triggered insured losses of at least USD 1 billion
In 2010, ten events triggered insured losses of USD 1 billion or more. The two biggest insured losses were caused by earthquakes – the February earthquake in Chile (USD 8 billion) and the September earthquake in Christchurch, New Zealand (USD 4.4 billion). The third costliest event was winter storm Xynthia in Western Europe, which led to insured losses of USD 2.8 billion. Three storms in the US and two storms in Australia also generated losses of over USD 1 billion. Property claims from the BP Deepwater Horizon explosion in the Gulf of Mexico are estimated at USD 1 billion. Given the complexity of the claims, the latter figure is still subject to substantial uncertainty. The overall insurance loss is higher, as liability losses are not included in the sigma numbers.
Natural catastrophes and man-made disasters cost society USD 218 billion in 2010
In 2010, worldwide economic losses from natural and man-made catastrophes were estimated at USD 218 billion. This represents a sharp increase over 2009, when economic losses totalled USD 68 billion. Asia was the hardest-hit region with total damages of approximately USD 75 billion. Pakistan and several large regions in China experienced extraordinary rainfall during the summer, resulting in devastating floods.
Thomas Hess, Chief Economist of Swiss Re, comments: ”2010 was not only characterised by severe earthquakes that ranked among the deadliest, costliest and most powerful in history, but also by a series of extreme weather events, such as major floods. Some of these flood events sadly affected countries with poor emergency preparedness and underdeveloped insurance markets.”
Hess continues: "These events show the urgent need to strongly improve prevention and post disaster management in order to reduce human suffering. The rapidly increasing wealth in emerging markets should also be used to address these problems. This wealth will also allow insurance to grow and close part of the large insurance protection gap in many emerging markets, the main reason why the financial protection against catastrophes is low in most emerging markets.”
Notes to editors
Swiss Reinsurance Company Ltd Swiss Re is a leading and highly diversified global reinsurer. The company operates through offices in more than 20 countries. Founded in Zurich, Switzerland, in 1863, Swiss Re offers financial services products that enable risk-taking essential to enterprise and progress. The company’s traditional reinsurance products and related services for property and casualty, as well as the life and health business are complemented by insurance-based corporate finance solutions and supplementary services for comprehensive risk management. Swiss Re is rated “A+“ by Standard & Poor’s, “A1” by Moody’s and “A” by A.M. Best.
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