1. News Articles
  2. Related News Articles
News Article Details

Aon Benfield: August Natural Disaster Events Highlight Disparity of Global Insurance Cover

Posted on 07 Sep 2012 by Neilson

Facebook LinkedIn Twitter Google

AonAon Benfield, the global reinsurance intermediary and capital advisor of Aon plc on Thursday released the latest edition of its Global Catastrophe Recap report, which reviews the natural disaster perils that occurred worldwide during August.

Published by Impact Forecasting, the firm's catastrophe model development center of excellence, the report reveals that Hurricane Isaac became the first landfalling hurricane along the United States' Gulf Coast region since 2008, killing at least 7 people in the U.S. and 34 in the Caribbean.

Total economic losses from Isaac are forecast to reach the single-digit billions of dollars (USD). However, it is too early to estimate whether insured losses will exceed the USD2.3 billion sustained from Hurricane Gustav in 2008, which had a similar path to Isaac. Just days after landfall, insurers had already received more than 28,000 home and auto claims, with that total expected to steadily increase.

Tropical cyclone activity was heightened across the Northwest Pacific Basin during the month, with six typhoons making landfall and causing notable damage in Eastern and Southeastern Asia.

The costliest, Typhoon Damrey, was forecast to have caused economic damages of CNY20.86 billion (USD3.28 billion) according to China's Ministry of Civil Affairs (MCA), and insured losses of CNY660 million (USD124 million) according to the China Insurance Regulatory Commission (CIRC).

Meanwhile, Typhoon Haikui also affected eastern China, with the MCA noting CNY13 billion (USD2.04 billion) in economic losses, and the CIRC citing payouts covering CNY1.46 billion (USD230 million).

Steve Jakubowski, President of Impact Forecasting, said: "August witnessed a series of costly cyclone events globally, which have highlighted not only the disparity in risk management procedures between countries, but also the relative levels of insurance penetration. Taking Typhoon Damrey in China as an example, the insurance cover may be in the region of three percent of the resultant total economic losses. This is very low compared to the United States, where we expect insurance cover for wind for Hurricane Isaac to be much higher."

In South Korea, Super Typhoon Bolaven caused extensive damage and killed at least 20 people, resulting in economic losses in excess of KRW200 billion (USD177 million), and agriculture and auto insurance claims of more than KRW120 billion (USD106 million).

In other tropical cyclone activity, Hurricane Ernesto and Tropical Storm Helene made landfall in Mexico.

Also in August, significant flood events were recorded. In the Philippines, torrential monsoon rains were enhanced by the passage of Typhoon Haikui, which led to catastrophic flooding on Luzon Island. At one point, as much as 60 to 90% of Metro Manila was inundated by varying levels of floodwaters. At least 109 people were killed, and economic losses were listed at PHP10 billion (USD239 million). However, the total does not reflect damages sustained by the private sector, which typically account for the majority of losses.

Elsewhere, major flooding occurred in Niger, Nigeria, Chad, Cameroon, Sudan, Senegal, India, Pakistan, and China.

Two strong earthquakes struck northwestern Iran, killing at least 306 people and injuring more than 3,000 others, primarily in the province of East Azerbaijan. The magnitudes 6.4 and 6.3 tremors completely destroyed 46 villages and severely damaged 425 others. At least 157,000 people were left homeless, and economic losses were listed by the government at IRR7.36 trillion (USD600 million).

Drought conditions worsened in Italy and Russia, with each country citing economic agricultural losses beyond USD1 billion, and severe weather events were recorded in the United States, Canada and Ukraine.