Insured losses from natural catastrophes were greater than $110 billion in 2011, the second-highest figure ever recorded, according to Swiss Re in “Taking a Comprehensive View of Catastrophe Risk Worldwide,” a report from AIR Worldwide. And there is a 6.7 percent probability the insurance industry will experience a loss of this size in any given year.
In 2012, insured losses totaled $65 billion, $25 billion of which are attributed to Superstorm Sandy, as estimated by Munich Re. The costliest year was 2005; insured losses from natural catastrophes including Hurricanes Katrina, Rita and Wilma alone caused claims of more than $100 billion.
The report endeavors to put insured losses into perspective and examine potential scenarios that could result in larger global insurance losses. Average annual insured losses were found to be $59 billion, and the 1-percent aggregate loss was found to be $206 billion, as based on perils and regions modeled by AIR currently. The report also offers three loss scenarios demonstrating the combinations of catastrophes worldwide that would make losses of that magnitude possible.
“Many in the industry were surprised at the aggregation of losses in 2011, especially since we didn’t have a major U.S. hurricane,” said Bill Churney, SVP AIR Worldwide. “However, AIR’s models incorporate years with losses much greater than what we experienced in 2011. This is the real value of having a credible catastrophe model: to fully anticipate possible outcomes, including future catastrophes and future years that will produce losses exceeding any historical amounts.”
Report Highlight: 2011 Natural Catastrophes
• $362 billion - Economic losses from natural catastrophes were the highest on record
• $110 billion - Insured losses were the second highest on record
• $49 billion - Earthquakes were the most expensive natural catastrophe and insured earthquake losses were the highest on record
• $49 billion - Asia suffered the highest insured losses of any region: 42.5 percent of the global total
• $35 billion - The Tohoku earthquake in Japan was the single highest insured loss-causing event
• $12 billion - The Thai floods and the M 6.3 Christchurch earthquake in New Zealand tied for the second highest insured losses
• Three natural catastrophes caused insured losses in excess of $10 billion
• Fifteen natural catastrophes caused insured losses in excess of $1 billion
“Despite the significance of the toll in 2011, insured losses fell well within the range for which global insurers and reinsurers should be prepared,” Churney said. “It’s our hope that the report will help companies increasingly concerned about escalating levels of loss to better understand and own their risk.”
As of late December, AIG and Allstate estimated their Sandy-related losses at $1.3 billion and $1 billion respectively. Swiss Re, reported that it expects to pay out $900 million. Mutual insurer State Farm, has not reported estimated losses, but released the total number of claims reported as 110,198 home and 17,843 auto.
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