Insurance industry feels the effects of climate change

Posted by Laura Grant on December 30, 2007
Posted in Business

There were 950 natural disasters in 2007, up from 850 in 2006, according to this year’s annual disaster report of Munich Re, the world’s second-biggest re-insurer.

This is the highest number since the group started compiling its report in 1974.

The total cost of 2007’s disasters was $75-billion; 2006’s bill was $50-billion.

Disasters are defined as natural events causing more than 10 fatalities or damage in the millions of dollars.

The most economically destructive disaster was an earthquake in Japan in July that caused $12.5 billion of damage, including to a nuclear power plant. Eleven people were killed. Insured losses from the quake totalled $300-million.

The most expensive event for the insurance industry was the Kyrill storm that hit Europe in January, killing 49 people and causing $10-billion worth of damage, $5.8-billion of which was insured. Floods in Britain were the second costliest event to insurers.

The worst human catastrophe was Cyclone Sidr, which killed 3,300 people in Bangladesh and India in November. The cyclone caused losses worth $2.3-billion, hardly any of it was insured, Munich Re said.

“The figures confirm our expectations. 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,” said Torsten Jeworrek of Munich Re.

Other natural disasters this decade include:
– 2005 Hurricane Katrina caused about $66 billion in losses when it devastated the southern United States city of New Orleans,
– 2004 Hurricane Ivan caused $13.7 billion in property damage in the Caribbean.
– 2006 Typhoon Kaemi caused $9 billion in losses in China.
– 2002 flooding in Europe caused $3.4 billion in insurance losses.
– 2006 Typhoon Shanshan in Japan cost $2.5 billion in total losses.
– 2002 Australia’s worst drought in 100 years, caused losses of $2.5 billion.

Sources: Reuters 1 and 2

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