January 25, 2013 by Canadian Underwriter
Aon Benfield announced Thursday the release of its annual global climate and catastrophe report, noting 2012 was the eighth warmest year since 1880 and the costliest catastrophe worldwide was Hurricane Sandy, while a hailstorm July 12 in Calgary led to claims exceeding $500 million.
Impact Forecasting, the Aon Benfield unit that develops software and catastrophe models, published the Annual Global Climate and Catastrophe report. It noted there were 295 natural peril events worldwide in 2012, with insured losses of US$72 billion and total economic losses of US$200 billion. The 10-year average for annual insured and economic losses were US$52-billion and US$187 billion respectively, Impact Forecasting reported.
Worldwide, about two-thirds of insurance losses were from Hurricane Sandy and the drought in the U.S. alone. Of the other eight events that made the list of the top 10 global insured loss events, only one was outside the U.S. Aon Benfield counted two earthquakes in May in Italy as one catastrophe. Economic and insured losses from these were US$15.8 billion and US$1.3 billion respectively.
The Aon Benfield report pegged the insured and economic losses of the year-long drought and heat wave last year in the U.S. at US$20 billion and US$35 billion respectively. By comparison, the insured and economic losses in the drought and heat wave in the U.S. in 1988 were $1.9 billion and $74.1 billion respectively, according to a table included in the report, which accounted for inflation by listing those figures in 2012 dollars.
“Hurricane Sandy was the costliest single event of the year causing an estimated US$28.2 billion insured loss for Sandy, combining private insurers and government-sponsored programs, and approximately US$65 billion in economic losses across the United States, the Caribbean, the Bahamas and Canada,” the report noted. “These losses remain subject to change.”
Hurricane Leslie, which made landfall in Newfoundland Sept. 11, caused winds of nearly 140 km/h but total economic losses were listed at $10 million.
Worldwide, the deadliest event of the year was Super Typhoon Bopha, which killed more than 1,900 people in the Philippines.
“A total of 14 tropical cyclones made landfall globally in 2012, below the long run average of 16,” the report stated, noting 2012 was “the eighth warmest year in world history since global land and ocean temperature records began in 1880.”
In Calgary, a hailstorm July 12th damaged homes, businesses, trees, vehicles and power lines.
“The hardest-hit area of Calgary came in the metro region’s northeast as the Insurance Bureau of Canada reported that claims payouts were in excess of $552 million,” Aon Benfield noted. “Total economic losses were even higher.”
Other events of Canada highlighted in the report included flooding in central and eastern Canada May 25 through 29, which damaged 1,100 homes in Thunder Bay, Ont. and infrastructure in Montreal. Quoting IBC numbers, Aon Benfield noted claims were at least $260 million.
On June 1, water poured into the subway concourse of Toronto Union Station after more than 50 mm of rain fell.
“The excessive water overflowed a sewer in the midst of being reconstructed, which flooded rail tracks and the station itself,” according to the report.
Aon Benfield also recounted the frost in Ontario April 28-29, which destroyed nearly 80% of the province’s apple crop and up to 30% of the peaches, cherries, pears, plums and nectarines. Total economic losses, according to the report, were $100 million.
“Despite growing support for ‘the new normal’ theory of a world dominated by rapidly escalating global catastrophe losses, our study highlights that 2012 returned to a more normal level of losses after the extreme economic and insured losses of 2011,” Aon Benfield Analytics CEO Stephen Mildenhall stated in a press release.
“While nominal catastrophe losses are increasing at an alarming rate, economic losses as a percent of global GDP – a measure appropriately normalized for inflation and economic development – has remained relatively stable over the past 30 years.”
The 2012 events included an Oct. 27 earthquake south of Masset, British Columbia which, at 7.7 on the Richter scale, was the second-strongest earthquake since 1700 in Canada.
“Damage was largely minimal as the tremor occurred in a rather sparely populated region within Canada’s Haida Gwaii archipelago,” Aon Benfield reported.
The report included historical tables, which accounted for inflation by listing losses in 2012 U.S. dollars. The catastrophe with the highest economic loss since 1950, at $217 billion, was the March, 2011 earthquake and tsunami in Japan. That had an insured loss of $36 billion. Hurricane Katrina, which inundated New Orleans in August, 2005, had a lower economic loss, of $146.1 billion, but a higher insured loss, of $78.2 billion.
The deadliest event since 1950, with about 300,000 deaths, was the 1970 tropical cyclone in Bangladesh with a total economic loss of $500 million. Aon Benfield indicated the insured loss was not available. For the 2004 Indian Ocean tsunami, which killed 227,898, Aon Benfield listed $6 billion in insurance losses and $16.9 billion economic losses.
Other noteworthy catastrophes in history listed in the tables with this year’s report included