First Half 2010 Catastrophe Losses Double Average at $22 Billion

A report from Munich Re (www.munichre.com) notes that the first half of 2010 was “marked by an exceptionally large number of natural catastrophes and the scale of the losses they caused.” The reinsurer recorded 440 “events from January until the end of June, the second highest figure for this period since 2000.”

Overall losses for the period were $70 billion. “This figure already exceeds the total for 2009 as a whole and is well above the first-half average for the past ten years,” said the bulletin. Insured losses were $22 billion, “more than double the first-half average since 2000 and even higher than the figure for 2008, when the previous record for first-half losses was set.”

Prof. Peter Höppe, Head of Munich Re’s Geo Risks Research stated: “Following a relatively benign 2009, the first six months of this year were marked by three natural catastrophes ranked as great.” This is the term used by Munich Re to describe events entailing billions in losses or several thousand fatalities.

Particularly devastating were the earthquakes in Haiti and Chile. They rank as “the most devastating events ever recorded, based on a number of parameters.” More than 223,000 people died in Haiti when the quake struck on January 12, “one of the highest death tolls on record, and 1.2 million were left homeless.”

Munich Re noted that the epicenter of the “main quake, of magnitude 7, which lasted barely a minute, lay some 25 kilometers [15.6 miles] southwest of the capital, Port-au-Prince. Overall losses were huge relative to the country’s economic strength but insured losses ($150 million) were minimal due to low insurance penetration.”

The earthquake which struck Chile on February 27 presented a different profile. The magnitude 8.8 quake, with its epicenter around 100 kilometers [60 miles] northeast of the city of Concepción,” was the fifth largest ever measured. It released 500 times the energy of the Haiti earthquake but the death toll (521) was much lower.” Prof. Höppe stressed that this “shows how important and effective it is to offer people as much as protection as possible using modern, earthquake-resistant construction standards”.

Despite the lower loss of life, Munich Re said the Chile quake was the “second most expensive earthquake on record, with insured losses of some $8 billion due to high insurance penetration levels in Chile’s commercial and industrial sectors. Overall losses amounted to $30 billion.

“The third great natural catastrophe of the first six months of the year was the earthquake that struck China in April, claiming 2,700 lives.”

In addition to a recorded total of 55 geophysical events, including the eruption of the volcano Eyjafjallajökull in Iceland in March, which led to tens of thousands of flight cancellations, there were “385 weather-related natural catastrophes caused significant losses. The costliest single event was Winter Storm Xynthia, which hit the Canary Islands and then swept across the Iberian Peninsula, France and parts of central Europe on 26-28 February. Winds of nearly 240 km/h were recorded over the Pyrenees. Overall losses amounted to $4.5 billion and insured losses to $3.4 billion.

“Other notable weather-related catastrophes during the first six months of 2010 were floods and landslides following torrential rainfall in Madeira in February, violent storms that produced heavy flooding in several US states in the first half of May, severe floods in central Europe in June and widespread flooding in China, which is still ongoing. Global warming is expected to increase the number of weather events of this type.”

Torsten Jeworrek, Munich Re’s Reinsurance CEO added: “In the first six months, we recorded an exceptionally large number of substantial major losses. However, our core business is to help insure and carry natural catastrophe losses.

“This is an area where we benefit substantially from the know-how of our Geo Risks Research experts. They analyze and evaluate loss trends using the world’s largest natural-catastrophe loss database, thus enabling us to calculate prices commensurate with the risks, which is the cornerstone of our underwriting.”

The natural catastrophe statistics for the first six months of 2010 were presented on July 7, at 5.00 p.m. CEST (11.00 a.m. EST), in a webinar given by Munich Re America in cooperation with the Insurance Information Institute.

Source: Munich Re.