Widening Gap Between Economic and Insured Cat Losses

The widening gap between economic losses and insured losses from natural catastrophes is our topic du jour.

Guy Carpenter’s GCCapitalIdeas.com just published this  chart showing that approximately 70 percent of global economic losses from natural catastrophes were uninsured between 1980 and 2013:


Another compelling chart shows how small a proportion of catastrophe losses were insured in both advanced and emerging markets between 2002 and 2011:

Munich Re  just reported  that economic losses from natural catastrophes worldwide in 2013 amounted to around $125 billion and insured losses  around $31 billion. This compared with  economic losses of $160 billion and  insured losses of $65 billion reported by Munich Re  in 2012.

According to a  recent post over at  Artemis blog, this means that just over 40 percent of economic losses from natural catastrophes were insured in 2012, while in 2013 that percentage was significantly lower at 25 percent.

Artemis blog’s take on this disparity:

The reason for this is likely that losses were more widely distributed around the world, in 2012 90% of insured losses were in the U.S. (compared to just 54% in 2013). The lack of hurricanes, a well covered risk typically with high insured to economic loss ratios and the fact that as a market the U.S. has one of the greatest insurance penetrations for property cover, as well as hurricane Sandy’s impact.”.

The Guy Carpenter charts also point to a growing need for coverage to protect against catastrophes  in both advanced  and emerging markets.

3 thoughts on “Widening Gap Between Economic and Insured Cat Losses”

  1. Wow these are very interesting statistics! This just proves that coverage is necessary in today’s ever changing and unpredictable environment. Be safe, get coverage.

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