Total insured losses from natural catastrophes and man-made disasters will reach approximately US$125 billion in 2012, according to Swiss Re’s latest preliminary estimates.
The reinsurance giant reported today that natural catastrophes alone caused the loss of over 11 000 lives and roughly US$60bn in insured casualty claims.
After a benign first half of the year, Hurricane Sandy and drought in the US in the second half of 2012 will lead to total economic losses from disasters of at least US$140 billion. Insured losses arising from the catastrophic events of the year are set to reach roughly US$65 billion. However, the tally is ‘moderate’ according to Swiss Re compared to 2011, which saw historic insured losses of over US$120 billion due to record earthquakes and flooding.
However the figure remains above the average of the last 10 years. Kurt Karl, Swiss Re’s Chief Economist, said: “Severe weather events continue to affect many parts of the world. Although insurance cannot bring back lost lives, many people and businesses can rely on financial relief from insurance cover, as is the case for the US. However, in large parts of the globe that are prone to severe weather events, people and businesses could increase risk-preparedness by eliminating underinsurance.”
Weather-related events in the US dominate 2012
After two years of historic losses arising from record earthquakes and floods in Asia Pacific and South America, 2012 is dominated by large, weather-related losses in the US. Moreover, the top five insured loss events are all in the US.
Hurricane Sandy is the largest Atlantic hurricane on record in terms of wind span. This record storm surge caused widespread flooding and damage to a densely populated area on the East Coast of the US. It also led to the worst power outage caused by a natural catastrophe in the history of the US.
Before hitting the US, Hurricane Sandy also struck the Caribbean and the Bahamas, adding to the loss of lives and property. Estimates for the insured cost of the devastation are between USD 20 and 25 billion, which is relatively high despite the fact that the Hurricane was weaker in comparison to others. Part of the reason for the high cost is the combination of moon tides and interference with concomitant weather patterns that amplified the impact.
However, the total insured loss tally is subject to a high degree of uncertainty, as it is still too soon to gauge the final overall damage.In addition, extremely dry weather conditions and limited snowfall in the US led to one of the worst droughts in recent decades, affecting more than half of the country. Drought-related agricultural losses are likely to reach approximately US$11 billion, including pay-outs from federal assistance programs.