A recent study released by Swiss Re, confirms that insured catastrophe losses for 2000 totaled $10.6 billion, falling significantly below those in 1999, which reached $32.9 billion.The survey also concluded that p/c reinsurance rates were on the rise, but warned that increased losses from natural catastrophes, particularly floods could also increase.
According to the study, called the Sigma Report, only one event, the Tokai floods in Japan, almost reached the billion-dollar mark. Killer earthquakes and storms last year were virtually non-existent, and flood losses caused most of the damage. Besides Japan, France,
The U.K., Italy and Switzerland all had significant losses from floods and landslides. The other two events causing losses exceeding half a billion dollars were winter storms in the U.S. and two tornadoes that struck the Midwest last March. Floods also caused the highest loss of life, notably in India, Bangladesh, Cambodia, Mozambique, Vietnam and Thailand.
According to the study “floods accounted for a high proportion of natural catastrophe losses $2.5 billion, making 2000 one of the most expensive years for floods in insurance history, along with 1993, when the Mississippi floods caused huge losses to the insurance industry.”
While insured losses were low, the study reported that overall economic damage and loss of life remained high. Eight natural catastrophes exceeded $1 billion, as did losses from the “love bug” virus.
The report showed that developing countries were hardest hit. “In the 351 events recorded by sigma, more than 17,400 people lost their lives; floods in India and Bangladesh in August and September alone accounted for at least 1,200 fatalities, while the death toll from those in southern Africa was 920. The 9,600 victims of man-made catastrophes were clearly above the average for the past decade; two-thirds of these victims resulted from transport disasters on land, at sea, and in the air – a sign of increasing mobility worldwide.
Swiss Re calculates that premiums for catastrophe reinsurance are recovering but still not covering costs. Its analysis showed that the sustained collapse in catastrophe reinsurance prices seen since 1994 came to an end in 2000. It was only during the renewals for 2001, however, that a general trend became apparent.
“The 16 percent rise in the markets examined therefore signals a trend reversal, though one which only makes up for the losses suffered in 1998/99,” Swiss Re concludes. “According to the study, further price rises are necessary if catastrophe reinsurers are to cover their costs in the long term.”
A full copy of the report may be obtained from the Swiss Re website at: http://www.swissre.com, by E-mail: email@example.com, or by contacting their New York office at: 212/317-5135; or via fax: 212/317-5455.
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