Posted on 18 Mar 2009
Last year was one of the worst for catastrophe losses, according to a new Swiss Re Sigma Study, "Natural catastrophes and man-made disasters in 2008". Insurers across the sector paid out $52.5 billion to compensate for property claims, and the total impact on the economy caused by natural and man-made catastrophes around the world added up to $269 billion.
According to the study, 137 natural catastrophes and 174 man-made disasters occurred in 2008. Asia suffered the most in terms of the number of lives lost, while the US was worst hit in regard to insured property losses. Europe was less impacted with only minor losses compared to last year.
High catastrophe claims in the US were driven by Hurricanes Ike and Gustav as well as thunderstorms during the first half of 2008. Europe's losses, down from last year, represented slightly more than a tenth of the world total in 2008, largely due to lower storm and flood damages. In early 2008, China suffered losses amounting to more than $1.3 billion, driven by an unusually cold winter with record amounts of ice and snow.
Major man-made disasters caused losses of $7.8 billion in 2008, with large-scale industrial fires, explosions and losses in the energy sector at the top of the list. Man-made catastrophes resulted in 5 600 deaths in 2008; shipping and boating accidents as well as bombings and social unrest caused the most casualties.
In 2008, the total damages to the economy amounted to $269 billion worldwide. Almost half this amount can be attributed to the earthquake that struck China in May, which caused costs to the economy of $124 billion. This corresponds to approximately 3% of China’s GDP.
Many governments in Asia face significant financial risks when catastrophes occur. Given the rapid development of income and wealth in Asia, the financial exposures will swiftly rise. This is likely to increase the focus on prevention and ex-post disaster management. It will also give rise to the development of insurance as a tool to cope with the financial consequences of catastrophes. It is expected therefore, that in Asia, insurance will play a more important role in the future than it does today.
Nevertheless, such development needs time. Given the high percentage of people with low incomes in this part of the world, public private partnerships are critical to the development of effective and accessible insurance solutions. Global and regional insurers and reinsurers also play an essential part in the further establishment of insurance in Asia, on the one hand by sharing their knowledge and expertise, and on the other by helping to absorb the rising risks in these markets.