Swiss Re’s latest sigma report examines the natural catastrophes and man-made disasters of 2005. Among other findings it notes that “more than 97 000 people lost their lives” as a result of one of the “almost 400 catastrophes, which caused damage totaling more than $230 billion.” About one third, or $83 billion, was covered by insurance. In 2004 insured cat losses amounted to $48 billion. “2005 turned out to be the costliest year ever for property insurers,” said the report.
The Oct. 8 earthquake measuring 7.6 on the “moment magnitude scale” in the mountain region of Kashmir caused the largest loss of life with over 73,300 people killed – 72, 000 of them in Pakistan and 1,300 on the Indian side of the border.
Swiss Re said: “Natural and man-made catastrophes in 2005 caused $230 billion of damage to buildings, infrastructure, vehicles, or losses to directly affected businesses. Hurricane Katrina entailed the highest total damage by far, at $135 billion. Hurricane Wilma ranked second, with destruction amounting to $20 billion, followed by hurricanes Rita at $15 and Dennis at $4 billion.” The total damage of the Kashmir earthquake is estimated to be $5 billion.
The report also notes: “Man-made disasters triggered damage totaling $10 billion, the most costly being the terrorist attack in London in July, explosions in oil processing plants in Canada in January and in the US in March, and the riots in France in October and November.”
Swiss Re said the $83 billion in insured losses creates a “new dimension.” $78 billion stemmed from natural catastrophes, and $5 billion from man-made disasters, with the hurricanes being responsible for most of those losses. It’s estimated that Katrina alone will cost the insurance industry $45 billion, followed by Rita and Wilma at $10 billion each and Dennis at $1 billion.
The sigma report indicates that “the hurricane season 2005 also broke several meteorological records: 27 named storms (previous record year: 1933 with 21), of which 15 reached hurricane windspeeds (previous record year: 1969 with 12). For the first time ever, three hurricanes attained category 5, the highest on the Saffir-Simpson scale.”
Perhaps even more alarming is Swiss Re’s analysis of future weather patterns, which predicts an increase in hurricane losses related to the warm phase of the “Atlantic multidecadal oscillation” (AMO) in the North Atlantic. “This warm phase started in 1995 and is expected to last for another 10 to 30 years. Given such climatological conditions, propitious to windstorms, the above-average hurricane activity can be expected to continue, entailing more intense hurricanes.”
The full report may be consulted on the Company’s Website at www.swissre.com.
Topics Catastrophe Trends Profit Loss Hurricane
Was this article valuable?
Here are more articles you may enjoy.