January 1, 2004 by Canadian Underwriter
On a global scale, 2003 will go down as a modest year for insured catastrophe losses, but the human toll of yearend disasters – specifically the earthquake in Iran – were significant.
In its annual report on global catastrophes, Munich Re notes that total insured losses for the year were US$15 billion, with Swiss Re putting the figure at US$17 billion. This compares with US$11.5 billion in insured losses in 2002.
There were five cats costing insurers more than US$1 billion last year, all in North America – April ice storms in the U.S.; tornadoes and hailstorms hitting the U.S. Midwest in May; Hurricane Isabel in September; and the two California forest fires in early October – late November.
In 2003, the world experienced about 700 natural catastrophes, on par with 2002, Munich Re calculates. However, the death toll from nat cats was more than 50,000 in 2003, with the European heat wave and Iranian earthquake each claiming more than 20,000 lives. This is about five-times the number of deaths recorded in 2002.
Total financial loss estimates range from US$60-65 billion, up from US$55 billion in 2002.
A host of unusual events challenged the global community, including the August blackouts in Canada and the U.S., satellite losses, the European heatwave, and China’s poison gas leak at yearend. The heat wave specifically raises the issue of how climate change is impacting the planet and what toll this could take in the future, Munich Re notes.
Windstorms, specifically in the U.S., account for the bulk of insurer payouts in 2003, with storms in the U.S. Midwest in the spring accounting for US$5 billion in losses. This was followed by tornadoes hitting the U.S. in May, costing US$3 billion. Finally, Hurricane Isabel cost U.S. insurers about US$1.7 billion in September. Wildfires in the U.S., Canada, Australia and southwest Europe took a significant toll on insurers, with the California wildfires costing insurers US$2 billion alone.
Although 2003 will be classified as “moderate”, it does follow the trend of increasing costs due to catastrophes, which have cost billions of dollars virtually every year since the last 1980s, Swiss Re notes. “The 2003 figures confirm this trend towards high losses, which is being driven in part by increasingly densely populated areas, higher concentrations of insured values and the development of endangered zones.”