A large number of exteme weather events pummeled the United States in the first half of the year, and worldwide 2008 may go down in history as a year with one of the highest number of natural catastrophe victims, according to industry analysts.
There have never been so many tornadoes recorded in the first six months of a year, analysts say. Heavy rain and hail and subsequent flooding in Iowa and other Midwest states also caused billion-dollar losses, which also had a significant impact on the insurance industry. The overall loss caused by the floods on the Mississippi and elsewhere is likely to be around $10 billion, with an insured loss in the upper three-digit million dollar range.
Robert Hartwig, chief analyst for the Insurance Information Institute, says losses are running well ahead of 2006 and 2007 figures. Hartwig reported in a webinar hosted by Munich Re and I.I.I. that “2008 catastrophe losses already exceed all of 2007 losses and are on track to overtake 2006.” 2005 was by far the worst year every for insured catastrophe losses, he added. The webinar provided an overview of first-half 2008 natural catastrophes with a look ahead at environmental conditions than can influence the year’s second half.
Worldwide there were about 400 natural catastrophes through the end of June 2008. The largest number of events ever recorded in one year was 960 in 2007. Overall losses so far in 2008 total about $50 billion, according to the presenters. The insured losses are substantial and above the average of the last 10 years.
The earthquake in the Chinese province of Sichuan, the cyclone in Myanmar, and other natural catastrophes between January and June claimed the lives of more than 150,000 people. That is a higher number of deaths than in the full years since 2004, the year of the tsunami in South Asia.
“The Sichuan and Myanmar tragedies show that risk awareness and measures designed to afford protection against such catastrophes in highly exposed regions must be given high priority by the respective governments,” says Munich Re Board Member Torsten Jeworrek. Sichuan Province is highly earthquake-prone, and a Magnitude 7.9 earthquake like the one on May 12, 2008, was within the range to be expected on the basis of Munich Re experts’ risk models. Measures like adapting the building regulations in such regions could therefore save many human lives.
Altogether, the first half of the year — like the previous years — was marked by a large number of weather-related natural catastrophes.
“To this extent, the year is following the long-term trend towards more weather catastrophes, which is influenced by climate change,” Jeworrek continued. Jeworrek stated that Munich Re has the core competence for underwriting natural hazard risks. “In addition, with innovative products and new coverage concepts, we can support not only adaptation mechanisms but also the development of climate protection technologies.”
“Adaptation to the effects of climate change is one way of limiting many losses. Additionally, the battle against climate change calls for ambitious measures which, as evidenced by a new study commissioned by the German Federal Ministry for the Environment, are to be regarded economically as growth drivers,” said Prof. Peter Höppe, the Head of Geo Risks Research at Munich Re.
The year so far in the statistics of Munich Re’s NatCatSERVICE database: About 400 natural catastrophes were analyzed until June, 300 of which were attributable to weather extremes. Overall losses (including about $20 billion due to the Sichuan earthquake) total roughly $50 billion, with insured losses coming to about $13 billion. For purposes of comparison, in 2007 as a whole, 960 natural catastrophes generated overall losses of $82 billion, of which the insurance industry carried about $30 billion.
The figures were presented at the 2008 Natural Catastrophe Update webinar on July 8, hosted by Munich Re America and the Insurance Information Institute. The full presentation can be downloaded from the Munich Re America website (http://www.munichreamerica.com).
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