Reinsurers took it on the chin in 2010. According to a report issued today by Aon Benfield , the global reinsurance intermediary and capital advisor of Aon Corp., global natural catastrophic activity was far higher this year than in the previous three, with 314 separate events.
The "Annual Global Climate and Catastrophe Report," which reviews the natural disaster perils that occurred worldwide during 2010, finds that these events produced a total economic loss of $252 billion, and an insured loss of $38 billion. In 2009, 222 events resulted in a $58 billion economic loss and a $20 billion insured loss. (All dollar amounts are in U.S. dollars)
Aon Benfield's study reveals that the Chilean earthquake caused the highest insured loss of 2010, estimated at $8.5 billion, while flooding in Pakistan caused the greatest single-event economic loss, reported at more than $30 billion.
“Despite no major U.S. event, global insured catastrophe losses in 2010 amounted to nearly double those seen in 2009," says Stephen Mildenhall, CEO of Aon Benfield Analytics. "The most significant insured event—and one of the most significant ever outside the U.S.—was the February 27 Chile earthquake. The reinsurance industry provided ample capacity to handle the Chile event, and local companies benefited from prudent catastrophe risk based capital requirements and adequate reinsurance protection.
"At year end 2010 reinsurer capital has grown to record high levels," he continues. "Reinsurance supply will continue to outpace demand putting further downward pressure on rates at January 1 and ensuring that reinsurance remains a highly accretive, cost-efficient form of capital for our clients.”
The top 10 insured loss events of 2010, which Aon Benfield says resulted in $23 billion (61%) of insured catastrophe losses, was comprised of five severe weather events (tornadoes, hail, severe thunderstorm winds), one winter-based storm (snow, icing, cold temperatures and damaging winds), two earthquakes and two floods.
The remaining $15 billion insured catastrophe losses were a combination of winter storms, severe weather, flooding, tropical cyclone activity, earthquakes and wildfires, the report says.
“The United States and South America were the dominant regions for insured losses in 2010, primarily due to damaging winter and springtime weather in the U.S, and the Chile earthquake in South America," says Steve Drews, Aon Benfield's impact forecasting associate director and lead meteorologist. "Asia accounted for the majority of the economic losses, driven by flooding in Pakistan and China, while Haiti’s devastating earthquake also had little to no effect on global insurers and reinsurers. Had these large economic loss events occurred in areas with higher insurance penetration, 2010’s insured loss total would have been far greater.”
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Corrected December 16, 2010 at 11:09AM: yes