Defraying The Costs Of Disasters

Even if insurers haven’t been paying out for U.S. hurricane losses in 2010, it’s important to recognize that the industry continues to play a vital role in helping individuals and businesses recover from other costly catastrophes, such as earthquakes.

A preliminary analysis of 2010 global catastrophe losses by Swiss Re puts the cost to the global insurance industry from natural catastrophes and man-made disasters at $36 billion this year.

This represents an increase of 34 percent over the previous year, despite the lack of U.S. hurricane losses. The first 11 months of 2010 saw eight $1 billion-plus insured loss events, Swiss Re noted.

Worldwide economic losses from catastrophes were $222 billion in 2010, more than triple the 2009 figure of $63 billion, further underscoring the need for insurance.

The costliest event in 2010 was the Chile earthquake in February which cost insurers $8 billion, according to Swiss Re estimates.

However, the deadliest event in 2010 was the Haiti earthquake which claimed more than 222,000 lives, and along with the deadly floods in China and Pakistan, was barely insured.

Note: global catastrophes this year resulted in the highest number of fatalities since 1976 (260,000 killed, compared to just 15,000 in 2009).

As Thomas Hess, chief economist at Swiss Re, comments:

The humanitarian catastrophes again showed how important prevention and post disaster management are for protecting the lives and health of people affected by natural hazards. They also revealed large differences in how developed insurance systems are in the affected countries and how important insurance is in coping with the financial consequences of disasters.†

Natural catastrophes cost the global insurance industry roughly $31 billion in 2010, while man-made disasters triggered additional claims of around $5 billion, according to Swiss Re.

The earthquake that struck New Zealand in September resulted in insured losses of roughly $2.7 billion.

Winter storm Xynthia in Western Europe led to insured losses of $2.8 billion, while property claims from the BP Deepwater Horizon explosion are estimated at $1 billion, though that figure is still subject to substantial uncertainty and does not include liability losses.

Check out I.I.I. facts and stats on global catastrophes  and I.I.I. info on how insurers defray the economic costs of disasters.

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