Aon Benfield’s 2012 Cat Review Finds 36% Rise in Insured Losses at $133 Billion

January 24, 2013

Impact Forecasting, the catastrophe model development center of excellence at Aon Benfield, has published its Annual Global Climate and Catastrophe Report along with the establishment of a new website, Catastrophe Insight, which, it noted, “provides 10 years of catastrophe data, including economic and insured losses across nine key natural perils. It covers the “tiop 10″ cat losses for the years 2005 to 2012.

The Annual Global Climate and Catastrophe Report reveals that 295 natural peril events occurred worldwide in 2012, compared to 257 in 2011. Together they caused total economic losses of $200 billion, only slightly above the 10-year average of $187 billion.

The report notes that, “while economic losses were close to average, insured losses in 2012 were 36 percent higher the ten year average at $72 billion (vs. $53 billion), because the two most costly events of the year occurred in the U.S. which has higher than average insurance penetration. 2012 insured losses were significantly lower than the record 2011 insured loss of $133 billion.” The report also points out that U.S. natural disasters account for more than half of 2012 global economic losses.

Stephen Mildenhall, CEO of Aon Benfield Analytics, stated: “Despite growing support for ‘the new normal’ theory of a world dominated by rapidly escalating global catastrophe losses, our study highlights that 2012 returned to a more normal level of losses after the extreme economic and insured losses of 2011.

“While nominal catastrophe losses are increasing at an alarming rate, economic losses as a percent of global GDP – a measure appropriately normalized for inflation and economic development – has remained relatively stable over the past 30 years. The moderate level of catastrophe losses for 2012 is reflected in strong growth in reinsurer capital during the year.”

Two U.S. natural peril events, Hurricane Sandy and a year-long drought, accounted for two-thirds of all 2012 insurance losses globally and nearly half of all economic losses for the year.

Hurricane Sandy was the costliest single event of the year, to date causing an estimated $28.2 billion in insured losses across private insurers and government-sponsored programs, and approximately $65 billion in economic losses across the United States, the Caribbean, the Bahamas, and Canada.

The most deadly event of 2012 was Super Typhoon Bopha, which killed more than 1,900 people after making landfall in the Philippines.

A total of 14 tropical cyclones made landfall globally in 2012, compared to a long term average of 16. Major flooding affected China and the United Kingdom, with other floods recorded elsewhere in Asia, Europe and Oceania.

Two earthquakes struck Italy causing considerable damage in the Emilia-Romagna region.

In 2012, Europe, Asia and North America (outside the U.S.) all sustained aggregate insured losses above USD1 billion due to flooding, earthquakes and tropical cyclones. Losses in Asia and Oceania were well below their recent 10-year averages, and Europe was slightly below its average.

Steve Bowen, Senior Scientist and Meteorologist at Impact Forecasting, pointed out: “After a year in which Asia and Oceania sustained significant natural disaster losses, the focus shifted back to the United States in 2012. The country was hit by nine separate billion-dollar insured loss events, including Hurricane Sandy and the most extensive drought since the 1930s.

“Tornado activity was dramatically lower than 2011, which can partially be attributed to the drought. U.S. severe weather losses were close to the recent five year average and 46 percent less than the record losses seen in 2011. Finally, 2012 marked the seventh consecutive year that no major hurricane made landfall in the U.S*, a streak not seen since the 1860s.”

Records show that 2012 ended as the eighth warmest year in world history since global land and ocean temperature records began in 1880.

Source: Aon Benfield

*IJ Ed. note: The report is a bit condusing on this. Perhaps Sandy wasn’t technically still a hurricane when it came ashore on the U.S. mainland, but it sure acted like one.

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