Munich Re: US accounted for 90% of insured losses in 2012
The US accounted for a higher proportion of the world’s natural catastrophe losses than usual in 2012, due to a series of severe weather-related events. That’s according to a 2012 catastrophe report just released by Munich Re, the world’s largest reinsurer.
Last year, natural catastrophes caused $160 billion in overall losses and $65 billion in insured losses worldwide. According to the German reinsurer, some 67 percent of overall losses and 90 percent of insured losses were attributable to the United States. Normally, the US accounts for 32 percent of overall losses and 57 percent of insured losses, according to the report.
The highest insured loss event of 2012 was Hurricane Sandy, which caused estimated insured losses of $25 billion and estimated overall losses of $50 billion.
“The heavy losses caused by weather-related natural catastrophes in the USA showed that greater loss-prevention efforts are needed,” said Munich Re board member, Torsten Jeworrek. “It would certainly be possible to protect conurbations like New York better from the effects of storm surges. Such action would make economic sense and insurers could also reflect the reduced exposure in their pricing.”
As serious as weather events were in 2012, overall, the losses were “significantly lower” than in 2011 when, as a result of earthquakes in Japan and New Zealand and severe flooding in Thailand, overall losses were $400 billion and insured losses were $119 billion.
According to the report, a long-term comparison shows that the 2012 losses were above the ten-year average of $50 billion for insured losses, and slightly below the average of $165 billion for overall losses.
The US was also the location for the second major loss event of 2012, caused by the “summer-long drought in the US that plagued the Corn Belt in the Midwest and surrounding states, where most of the USA’s main agricultural crops, corn and soybeans, are grown. Until November, 2012 had been the USA’s warmest year since records began in 1895,” the report said.
“Even June and July largely failed to produce the usual rainfall. Only in the Dust Bowl years, from 1934—1936, had yields been decimated by a worse drought. Nearly half of the USA’s arable acreage was hit by the 2012 event. The overall agricultural crop losses in the USA in 2012 totalled around $20 billion, of which approximately $15-17 billion is covered by the public-private multi-peril crop insurance programme, making it the biggest loss in US agricultural insurance history. In average years, insured losses are around $9 billion.”
A series of tornadoes also caused significant losses in the US, as “many squall lines” formed in the spring due to a natural climate cycle. Overall losses from the most severe tornado outbreak (on 2-4 March) came to $5 billion, of which 50 percent was insured. Tennessee was particularly badly hit.
Munich Re’s report also acknowledged that while some 9,500 people lost their lives in natural catastrophes last year, the death toll was considerably lower than the ten-year average of 106,000. “The relatively small number of fatalities was due to the fact that, in 2012, few severe natural catastrophes occurred in emerging and developing countries, where natural catastrophes tend to have far more devastating consequences in terms of human lives,” the report said.