Economic growth a main reason for the escalation of insured natural catastrophe losses since 1970: Allianz

Economic growth in high-risk areas has contributed to the average annual cost of insured claims from natural catastrophes increasing eight-fold since 1970, according to an Allianz report, Natural Catastrophes on the rise?
The report notes average insured claims costs related to natural catastrophes have escalated from $5 billion in the 1970s and 1980s up to $40 billion in 2010.
Already in 2011, catastrophe modeling companies have estimated claims costs arising from the March 2011 earthquake and tsunami in Japan may be anywhere between $15 billion and $35 billion. An earthquake in Christchurch, New Zealand in February 2011 is estimated to have caused insured damages of up to $8 billion.
Economic growth is the main reason for the jump in insured losses, the Allianz report notes.
“Property values are rising, population density and insurance penetration are increasing, often in high-risk areas – a trend that is compounded by the fast growth of some Asian economies in catastrophe-prone regions. The impact of climate change must also be watched.”
The Allianz report also notes that, during the past decade, the earthquakes that caused the fatalities were not necessarily the strongest ones. As an example, it notes the 2010 quake in Haiti released 500 times less energy than the quake that hit Chile two months later, and yet the Haitian quake caused more havoc.
“The factors [that] determine the impact are complex and include building design and materials, severity of secondary earthquake effects like tsunamis or fires and lack of preparedness.”