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Weather-Related Insurance Losses Doubled in 2007

Insurer: Cost of weather disasters doubled

European storm was most expensive in '07, followed by British floods

 

The Associated Press, Dec. 28, 2007

 


BERLIN - Losses to insurers from natural disasters nearly doubled this year to just below $30 billion globally after an unusually quiet 2006, a leading reinsurer said Thursday, from winter storms in Europe, flooding in Britain and wildfires in the U.S.

 

 

Munich Re also warned that climate change could mean a growing number of weather-related catastrophes in coming years.

 

 

 

"The trend in respect of weather extremes shows that climate change is already taking effect and that more such extremes are to be expected in the future," board member Torsten Jeworrek said in a statement. "We should not be misled by the absence of megacatastrophes in 2007."

 

 

 

While losses soared in 2007, the figure was far short of the $99 billion Munich Re recorded in 2005 -- when Hurricane Katrina slammed into New Orleans.

 

 

The world's second-largest reinsurer put total economic losses this year -- which includes losses not covered by insurance -- from natural disasters at $75 billion -- a 50 percent increase from last year's $50 billion, but far below the 2005 figure of $220 billion.

 

 

 

The costliest disaster for insurers was a Jan. 18-19 winter storm, dubbed Kyrill in German-speaking countries, which killed 49 people, caused transportation havoc, damaged property and tore down power lines across a broad swath of northern Europe.

 

 

The storm resulted in insured losses of about $5.8 billion and total economic losses of some $10 billion, Munich Re said.

 

Germany accounted for more than half the total.

 

 

Two bouts of flooding in Britain, in June and July, each led to insured losses of some $3 billion and total economic losses of $4 billion, Munich Re said.

 

 

Wildfires in the United States in October caused insured losses of $1.9 billion, while a mid-April U.S. winter storm resulted in losses of $1.57 billion, the company said.

 

 

This year's costliest Caribbean storm, August's deadly Hurricane Dean, placed seventh overall, with insured losses of $1 billion.

 

"The relatively low losses can be explained by the tracks of the hurricanes _ no major hurricanes reaching the US mainland, as in 2006," Munich Re said in a statement.

 

 

Munich Re said the year's deadliest natural disasters by far were November's tropical cyclone Sidr in

Bangladesh, which killed some 3,300 people; and flooding in South Asia from July to September, which accounted for 3,000 lives. Neither ranked among the year's 10 costliest in terms of insured losses.

 

 

The company said that, in all, 950 natural disasters were recorded this year -- up from 850 last year, and the highest figure since the company started keeping systematic records in 1974.

 

 

 

"All the facts indicate that losses caused by weather-related natural catastrophes will continue to rise," Munich Re's Jeworrek said.

 

 

 

Jeworrek said his company was "ready to deal with this," but noted that higher insurance premiums and tax-financed infrastructure repairs would result in higher costs for society as a whole, and said that "speedy international action is needed."

 

 

 

Munich Re is a reinsurer, meaning it offers backup policies to companies writing primary insurance policies. Reinsurance helps spread risk so that the system can handle large losses from natural disasters.

 

 

 

Copyright 2007 The Associated Press. All rights reserved.

 

 


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