Yearend catastrophes highlight rising exposure: Munich Re

As 2003 closed out with earthquakes in Iran and California, the events of the year highlight increasing exposures to catastrophe and new large-scale risks for insurers, says the world’s largest reinsurer. In its annual report on global catastrophes, Munich Re notes that total insured losses for the year were US$15 billion, versus US$11.5 billion in 2002, but the monetary figure may belie the overall increasing risk insurers and the public face from catastrophes both natural and man-made.
In 2003, the world experienced about 700 natural catastrophes, on par with 2002. 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.
Overall economic losses also rose, up US$5 billion to more than US$60 billion. And other events challenged the global community, including the August blackouts in Canada and the U.S., satellite losses, terrorist attacks, 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.
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.
“The insurance industry must prepare itself for increasing risks and losses,” says Stefan Heyd, corporate underwriting manager on Munich Re’s board of management. “This requires above all transparency and a limitation of the risks. Prospective action also means adjustments in the premiums.”