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Economic losses from Nepal earthquake could exceed US$5 billion: Aon Benfield


May 8, 2015   by Canadian Underwriter


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Preliminary economic losses from the magnitude-7.8 earthquake that struck Nepal in late April are “expected to reach and possibly exceed” US$5 billion, Aon Benfield revealed in its April 2015 Global Catastrophe Report on Thursday.

The Nepal earthquake destroyed more than 700,000 homes. Photo: @NDTV

The report from Impact Forecasting, Aon Benfield’s catastrophe model development team, said that the preliminary economic losses from the disaster could equal as much as 25% of Nepal’s gross domestic product. The earthquake killed as many as 10,000 people and “government figures revealed that more than 700,000 homes and other structures were damaged and destroyed by the earthquake, as well as dozens of historical sites,” Impact Forecasting said in a statement. “However, very low insurance penetration in the region meant that merely a fraction of the total damages were insured,” the report added. [click image below to enlarge]

The Nepal earthquake killed as many as 10,000 people

The earthquake also caused catastrophic damage throughout India, China and Bangladesh.

Related: Rebuilding Nepal: Canada’s disaster relief team sets up operations

“While the level of damage and casualties was enormous, the seismological magnitude of the event in the Indo Nepal region was not unexpected,” said Adityam Krovvidi, head of Impact Forecasting Asia Pacific, in the statement. “Scientists have been warning about a major event resulting from the ‘central seismic gap’ in the Himalayan fault system since the 1934 event.”

Unfortunately for the earthquake peril, Krovvidi went on to say, timing is always the greatest unknown factor. “The vulnerability of buildings and structures in Nepal poised a significant risk given the absence of good seismic code history and implementation practice. Impact Forecasting has already developed an earthquake scenario model for Nepal, which it released at its Singapore conference this week, and is planning to send a team of seismic and vulnerability experts to conduct a reconnaissance study.”

Related: Quake aid need acute in Nepal capital, more so in villages near epicenter; toll tops 3,700

The findings will be published in the “coming months,” Krovvidi said. [click image below to enlarge]

Total combined insured losses from U.S. tornadoes expected to reach US$2 billion

Also occurring the month of April were five separate severe thunderstorm events in the central and eastern areas of the United States. Dozens of tornadoes touched down, with parts of the Plains, Midwest, Southeast, Mid-Atlantic and Southeast sustaining the worst damage. “Total combined insured losses were expected to reach US$2 billion, including more than US$750 million from one event alone.”

Related: Recent storms Australia’s fifth declared cat of 2015

The report also noted the following catastrophes in April, among others:

• Severe weather in Australia caused significant damage in the states of New South Wales and Queensland. The Insurance Council of Australia estimated insured losses would near US$350 million;

• In China, four severe weather episodes caused widespread damage to properties and crops leading to aggregate economic losses of almost US$1 billion;

• Chile’s Calbuco volcano erupted three times and led to the evacuation of at least 6,500 residents. The eruptions were expected to cost the local economy up to US$600 million;

• Major wildfires engulfed parts of Russia’s southern Siberia, killing at least 33 people and destroying nearly 1,500 homes. Total economic damages were listed at US$140 million; and

• A stretch of wintry weather caused heavy crop damage in eastern China. Unseasonably cold temperatures left vast areas of crops destroyed, with total damages recorded at US$174 million.


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