Swiss Re Estimates 2012 Economic Losses at $140 Billion; $65 Billion Insured

According to Swiss Re’s sigma preliminary estimates, economic losses from natural catastrophes and man-made disasters will likely reach at least $140 billion in 2012, while total insured losses from natural catastrophes and manmade disasters will reach approximately $65 billion. Natural catastrophes alone will lead to more than 11,000 lives lost and roughly $60 billion in insured claims, Swiss Re said.

While the first half of 2012 was relatively calm, the second half was more violent, notably the damages caused by Hurricane Sandy. Nonetheless Swiss Re noted that the “tally is moderate compared to 2011, which saw historic insured losses of over $120 billion due to record earthquakes and flooding, but is above the average of the last 10 years.”

“Severe weather events continue to affect many parts of the world,” said Kurt Karl, Swiss Re’s chief economist.”Although insurance cannot bring back lost lives, many people and businesses can rely on financial relief from insurance cover, as is the case for the U.S. However, in large parts of the globe that are prone to severe weather events, people and businesses could increase risk-preparedness by eliminating under-insurance.”

Weather-related events in the U.S. dominated 2012 after two years of historic losses arising from record earthquakes and floods in Asia Pacific and South America.

The top five insured loss events are all in the U.S., the report said. “Hurricane Sandy is the largest Atlantic hurricane on record in terms of wind span. This record storm surge caused widespread flooding and damage to a densely populated area on the East Coast of the U.S. It also led to the worst power outage caused by a natural catastrophe in the history of the U.S.,” the authors said.

Sandy also caused a lot of damage elsewhere before hitting the U.S. It struck the Caribbean and the Bahamas, adding to the loss of lives and property. Estimates for the insured cost of the devastation are between $20 and $25 billion, “which is relatively high despite the fact that the hurricane was weaker in comparison to others.”

Swiss Re said that “part of the reason for the high cost is the combination of moon tides and interference with concomitant weather patterns that amplified the impact. However, the total insured loss tally is subject to a high degree of uncertainty, as it is still too soon to gauge the final overall damage.

In addition, extremely dry weather conditions and limited snowfall in the U.S. led to one of the worst droughts in recent decades, affecting more than half of the country. Drought-related agricultural losses are likely to reach approximately $11 billion, including pay-outs from federal assistance programs, the insurer reported.

Source: Swiss Re