Swiss Re has issued some preliminary findings from its forthcoming sigma report on the world’s catastrophes in 2002. Initial estimates show that it was a relatively benign year. Although “19,000 people world wide were killed by natural and man-made catastrophes, economic and insured losses are a good deal lower than they’ve been averaging,” said the announcement.
The report considers more than 300 “major events” in 2002 that caused estimated economic losses of around $40 billion, “well below the average of USD 68 billion recorded by sigma since 1990.” It estimated that the insurance industry will be liable for around $12 billion, considerably less than the catastrophic losses experienced in 2001.
“Natural catastrophe losses, estimated at USD 10 billion, hit property insurers harder than man-made losses, as they have done every year since 1990, with the exception of 2001 and the 11 September loss,” said the report. “High-profile natural catastrophes in 2002 included the two flooding events in Europe in July and August, which caused insured losses of USD 3.2 billion. In September, heavy rain in France brought additional losses of USD 440 million. In the US, a series of tornadoes in April cost insurers USD 1.5 billion, while Hurricane Lili in the Caribbean and the US caused losses of USD 650 million.”
The natural loss figure compares with the approximately $2 billion caused by man-made catastrophes in 2002, mainly due to major fires, aviation and space disasters.
Swiss Re noted that the $12 billion in losses “equates roughly to the average since 1970, adjusted for inflation,” and are “significantly lower than those experienced during the claim-intensive years since 1990, when annual losses averaged USD 21.5 billion.”
It warned, however, that 2002 should not be seen as “signaling a return to lower claims,” as the factors which have been causing claims to increase “- greater population densities and higher concentrations of insured values – still remain.”
The report went on to note that “flood losses in 2002 highlight the potential threat presented by risk concentrations.” The $3.9 billion in losses as a result of floods is “higher than the average recorded since 1990 (USD 1.1 billion) and eight times higher than the average recorded since 1970 (USD 0.5 billion).” The industry must develop insurance solutions to cope with the flood threat Swiss Re warned.
The full report is due to be issued in March 2003. Further information can be obtained on the company’s Web site at: http://www.swissre.com
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