US led world in losses to extreme weather events in 2012
U.S. Dominated Global Disaster Losses in 2012: Swiss Re
Climatecentral.org, April 1, 2013
The insurance industry had its third-most expensive year on record in 2012, with global economic losses from natural catastrophes and manmade disasters totaling $186 billion, according to a report issued March 27 by the reinsurance giant Swiss Re. The total insured losses for the year was $77 billion, which was well below the losses seen in 2011, when earthquakes and flooding in Asia caused insured losses of $126 billion, which were the highest on record.
According to Swiss Re, extreme weather events in the U.S. dominated the list of the most expensive disasters of 2012, with Hurricane Sandy alone costing an estimated $70 billion in total damage and $35 billion in insured losses. In addition, the prolonged U.S. drought and summer heat waves resulted in insured agricultural losses of $11 billion, which was the highest loss in the history of agriculture insurance.
According to Swiss Re’s data, nine of the world’s top 10 most expensive insured loss events of 2012 occurred in the U.S. That is explained by the country's widespread use of insurance and the prevalence of extreme weather events in 2012, which was the hottest year on record in the lower 48 states. Out of the $119 billion in total economic losses in the U.S. during the year, Swiss Re found, more than half, or $65 billion, was insured. That amounted to about 0.68 percent of U.S. GDP for the year.
In recent years, the insurance industry, including Swiss Re, has been warning of its increasing exposure to climate change-related increases in extreme weather events as well as the effects of sea level rise. Scientific research has shown that global warming has already increased the odds of some types of extreme events, such as heat waves and heavy precipitation events.
The report found that a 10-inch rise in global average sea levels by 2050 would nearly double the probability of extreme flood losses. “For the industry, this means that a $20 billion insured loss event, now expected once in 250 years, would be expected once in 140 years,” Swiss Re said in a press release. A 10-inch increase in sea level by 2050 is considered to be a conservative estimate, since it does not include the effects of a potentially rapid melt of land-based ice sheets in Greenland and Antarctica, Swiss Re said.
"So even without considering how climate change may affect future hurricane frequency or severity, the impact of sea-level rise alone is likely to be significant for both those seeking and those providing insurance protection," the report said.
According to Matthias Weber, Swiss Re’s group chief underwriting officer, Hurricane Sandy may be a preview of what’s to come as rising seas make future coastal storms more destructive. “Sandy challenged the industry with its combination of record wind field and storm surge,” Weber said in a press release. “The possibility that such events could increase in frequency and strike densely populated regions such as the northeast U.S. means that extreme storm surges need to be more thoroughly understood.”
Hurricane Sandy caused extensive damage to infrastructure in and near New York City, and Swiss Re found that costs to transit infrastructure in New Jersey totaled $3 billion, and another $3 billion for waste, water, and sewer services. New York incurred insured losses of $8 billion to its transit system when floodwaters surged into the tunnels of the city’s subway system. For example, a transportation hub under construction at the World Trade Center in New York City was flooded by about 125 million gallons of tidal water, according to the Federal Transit Administration, and all seven subway tunnels under the East River, which connect Manhattan to Brooklyn and Queens, flooded during the storm.
According to Swiss Re, Hurricane Sandy ranks as the second most-damaging hurricane on record behind Hurricane Katrina in 2005. However, when historical events were simulated using current U.S. insurance market exposure data, Hurricane Sandy ranked as the 14th-most damaging hurricane.
Globally, Typhoon Bopha, which struck the Philippines in December, caused the greatest loss of life, with 1,901 dead or missing.