Ongoing trend toward higher costs for natural catastrophes: Munich Re

A long-term trend toward higher natural catastrophe costs is continuing, according to Munich Re.
The first few months of 2010 were marked by a significantly large number of natural catastrophes, in contrast to 2009 with substantially lower natural catastrophe losses than in preceding years, Munich Re noted.
These 2010 Q1 catastrophes included the earthquake in Chile, hailstorms in Australia and Winter Storm Xynthia in Europe.
“For Winter Storm Xynthia, which wrought major damage in Europe on 27 and 28 February 2010, Munich Re continues to anticipate a reinsurance claims burden of around €70 million [Cdn$87.5 million],” Munich Re reported. “Provisions of around €160m [Cdn$200 million] have been established for the two hailstorms that occurred in Australia this March.”
As for the Chilean earthquake, Munich Re now estimates it will pay out US$1 billion in insured damages.
Exposure to geophysical events remains unchanged despite the earthquakes in Chile, Turkey and Costa Rica and volcanic eruptions in Iceland, Ecuador and Guatemala, Munich Re says. Human activity does not affect this exposure.
Steadily increasing insured values have meant a substantial rise in exposures and risks.
Additionally, the meteorological situation is changing in the case of storms and heavy precipitation.
“The number and intensity of weather-related catastrophes is expected to increase in the coming decades, largely on account of climate change,” the company reports.
“Events like Chile’s devastating earthquake reinforce our case for insisting that risks be consistently written at adequate prices, even after years where losses have been relatively low,” Torsten Jeworrek, Munich Re’s reinsurance CEO, said in a release.
The past has shown that current loss experience heightens market players’ awareness of the risks, Munich Re reports.