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Swiss Re: Catastrophes Cost Global Insurance Industry More than $20 Billion

Posted on 22 Aug 2013 by Neilson

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Swiss Re globaly cat lossesAccording to preliminary sigma estimates, total economic losses from natural catastrophes and man-made disasters were USD 56 billion in the first half of 2013.

The global insurance industry covered USD 20 billion of the total losses, of which USD 17 billion were caused by natural catastrophes, in large part due to widespread flood events. In the first half of 2013, disasters claimed 7 000 lives.

The overall economic losses to society of USD 56 billion were below the USD 67 billion of H1 2012. Insured losses were USD 20 billion, of which USD 17 billion stemmed from natural catastrophes. This was lower than the USD 21 billion in H1 2012 and also below the average of the last 10 years. Man-made disasters triggered an additional USD 3 billion in claims, unchanged from H1 2012.

Flooding a main driver of natural catastrophe losses in H1 2013

In H1 2013, flooding was a main driver of natural catastrophe-related losses, causing an estimated USD 8 billion in insurance claims globally. As a result, 2013 is already the second most expensive calendar year in terms of insured flood losses on sigma records. In 2011, the Thailand event alone brought record flood losses of more than USD 16 billion.

In June, heavy rains in central and eastern Europe caused massive floods that resulted in economic losses of close to USD 18 billion and claimed 22 lives. The estimated USD 4 billion cost for the insurance industry will make this the second most expensive fresh water flood event on sigma records. This year's flooding in Europe has also been more expensive than the 2002 floods in the same region which cost the industry over USD 2 billion (USD 3 billion at current prices).

Rains and subsequent flooding also hit Alberta, Canada, in June, generating insured losses estimated at USD 2 billion, the highest insured loss ever recorded in the country.

In January, Cyclone Oswald brought flood damage yet again in Australia, amounting to USD 1 billion in insured losses. Furthermore, India, Southern Africa, Indonesia and Argentina likewise experienced heavy rains in H1, which caused large-scale flooding and the loss of many lives. In India, 1150 died as a result of flooding in June and many more are still missing. This flood caused the most loss of life as a single event in the first half of 2013.

Jens Mehlhorn, Head of Flood Risk at Swiss Re: "Flooding continues to wreak havoc across all areas of the world. No one is immune from this ever-present disaster threat. Sadly, without insurance, the impact of these events is severe for many. While we cannot stop future floods, we believe that preventative actions can be taken to mitigate the overall impact of extreme weather events."

Additional losses from tornadoes and associated thunderstorms

Harsh spring weather spawned deadly tornadoes in the US Midwest. A tornado outbreak in May caused the loss of 28 lives and insured claims of USD 1.8 billion. The loss of life and property was mostly concentrated in Moore, Oklahoma, hit by a tornado rated 5, which is the highest rating on the Enhanced Fujita scale.

Another USD 7 billion in insured catastrophe losses resulted from other natural catastrophes and man-made disasters across the world in the first half of 2013.

Kurt Karl, Chief Economist at Swiss Re, says "Though 2013 has so far been a below-average loss year, the severity of the ongoing North Atlantic hurricane season, and other disasters such as winter storms in Europe, could still increase insured losses for 2013 substantially".