Insured losses from disasters breach $65 B

MANILA, Philippines - Total insured losses from natural catastrophes and man-made disasters will reach approximately $65 billion in 2012. Natural catastrophes alone will lead to over 11,000 lives lost and roughly $60 billion in insured claims.

According to global insurer and reinsurer Swiss Re, total economic losses from the disasters are estimated at $140 billion. Economic losses include uninsured part of the property losses related to the catastrophes.

It is, however, lower than the record $120 billion in insured losses registered in 2011, which likewise experienced a record number of floods and earthquakes.

The top insured loss amounted to approximately $25 billion caused by Hurricane Sandy followed by the $1-billion drought.

“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,” Swiss Re said in a report.

 Moreover, the top five insured loss events are all in the US.

The global reinsurer said that Hurricane Sandy is the largest Atlantic hurricane on record in terms of wind span.

Its 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 $20- and $25 billion, which is relatively high despite the fact that 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.

Swiss Re chief economist Kurt Karl lamented that 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 under-insurance,”  Karl said in the report.

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 $11 billion, including pay-outs from federal assistance programs.