A new Swiss Re sigma report, “Natural catastrophes and man-made disasters in 2002,” estimates the cost to the insurance industry at $13.5 billion, $1.5 billion more than the company’s preliminary estimates released last December.
“The increase was mainly due to higher storm losses, which totaled USD 6.7 billion. However, the annual loss burden on insurers was substantially down form USD 35 billion in 2001,” said Swiss Re. “While natural catastrophes in 2002 caused the majority of losses, USD 11.4 billion, man-made losses totaled USD 2.1 billion. This marks the return of natural catastrophes outweighing man-made disasters, a trend which was only broken in 2001, due to the 11 September terrorist attack.”
The report notes that “Property losses were below the long-term average, according to Swiss Re sigma statistics which started in 1970. Flood losses, however, cost insurers a record USD 4.1 billion. Floods are posing a growing challenge to the insurance industry and the state.”
Most of the $4.1 billion in flood related losses were due to the two flood events in Europe during the summer, which cost insurers an estimated $3.2 billion. “The previous records for flood losses also stem from the recent past: USD 2.9 billion in 2000 and USD 2.7 billion in 1993,” said Swiss Re. “The economic losses caused by the floods are significantly higher than the insured losses: sigma estimates that the two European floods alone triggered an economic loss of USD 15 billion.”
After the floods the four next most costly events were: the spring storms and tornadoes in the U.S., $1.7 billion; windstorm Jeanett in Europe, $800 million; Hurricane Lili in the Caribbean and the U.S., $700 million, and Tropical Storm Isidore in the same region, $500 million.
“For property insurers, threat scenarios still include terrorism, and 11 September gave the public a clear reminder of its ominous dimensions,” said the report. “In 2002, the attacks on Bali and Djerba further proved that international terrorism is a lurking threat. However, potential insured losses have been reduced considerably for private direct insurers and reinsurers. Terrorism cover has been restricted, and some markets have introduced new types of cover, e.g. the US, Germany and France, in which the state carries a substantial share of any loss.”
The full report may be obtained in PDF Format on the company’s Website: http://www.swissre.com, or by e-mail at: email@example.com.
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