2008 A Bad Year for Catastrophe Losses

The year past was remarkable in many ways. For the insurance industry, 2008 will be remembered as one of the worst years for catastrophe losses, with insurers spending $52.5 billion to settle property claims, according to “Natural catastrophes and man-made disasters in 2008” a study from Zurich-based Swiss Re.Ominously, the numbers reveal a trend toward an increase in the number and cost of catastrophes around the globe. The study tallied the damages from 137 natural catastrophes and 174 man-made disasters during the year. It found that natural catastrophes alone cost property insurers more than $44.7 billion in damages. While floods in Europe did take a toll, the report said the biggest claims were caused by hurricanes Ike and Gustav, which hit the Gulf Coast, and the devastating earthquake in central China.Indeed, the later event, which cost the Chinese economy $124 billion, will likely spur demand for insurance in the developing world, the study concludes.“Given the rapid development of income and wealth in Asia, the financial exposures will swiftly rise,” the report states. “This is likely to increase the focus on prevention and ex-post disaster management. It will also give rise to the development of insurance as a tool to cope with the financial consequences of catastrophes. It is expected, therefore, that insurance will play a more important role in Asia’s future than it does today.”