Munich Re’s loss figures for 2007 from natural catastrophes concludes that “despite the general absence of extreme events, overall economic losses had reached $75 billion by the end of December – an increase of 50 percent on 2006 ($50 billion).” However Munich Re also pointed out that the loss figures for 2006 had been “unusually low;” certainly compared to 2005, the all time record holder at $220 billion
Munich Re’s calculations also indicated that insured losses in 2007 also rose by about the same percentage to just under $30 billion from $15 billion. “The number of natural catastrophes recorded in 2007 was 950 (compared with 850 in 2006), the highest figure since 1974,” said the bulletin.
Board member Dr. Torsten Jeworrek commented: “The figures confirm our expectations and endorse our insistence that risks be consistently written at adequate prices, despite years with comparatively low losses as in 2006. The trend in respect of weather extremes shows that climate change is already taking effect and that more such extremes are to be expected in the future. We should not be misled by the absence of mega-catastrophes in 2007.”
In terms of human catastrophes, Munich Re noted that “storms, floods and landslides in various parts of Asia caused more than 11,000 deaths, around 3,300 attributable to Cyclone Sidr alone, which struck Bangladesh in November.”
In terms of insured losses, the costliest were in Europe, particularly Winter Storm Kyrill, which climaxed “an above-average winter storm season. The storm struck in mid January with “wind speeds far exceeding 100 km/h – and peak gusts of over 200 km/h – it wrought havoc across Europe as far as Poland, the Czech Republic and Austria on 18 and 19 January.” Overall economic losses were around $10 billion, with insured losses of around $5.8 billion.
Kyrill became the “second most expensive such event in Europe after Winter Storm Lothar (December 1999), which had higher wind speeds but at the same time involved a much more limited geographical area,” said Munich Re. “A noticeable feature of Kyrill was that widespread areas of Europe experienced sustained high wind speeds. Among the countries worst hit was Germany, with more than half the insured losses. Over 1.5 million individual losses were reported – many relatively small in scale, such as roof damage.”
Two heavy rain storms caused widespread flooding in the UK. Munich Re sais thyey were the “highest precipitation levels in England and Wales” since records began in 1914. “Central and northeast England experienced twice the normal rainfall. Losses from the events in June were comparable to those sustained three weeks later in July, some counties being affected on both occasions. Overall economic losses were around $4 billion for each event, of which $3 billion were insured in each case.”
Prof. Peter Höppe, Head of Munich Re’s Geo Risks Research Department explained: “These events cannot, of course, be attributed solely to climate change, but they are in line with the pattern that we can expect in the long term: severe storms, more heavy rainfall and a greater tendency towards flooding, including in Germany.”
As a result of those fears, Munich Re reminded the public that “for some considerable time,” it has been calling for “firm action to address the causes of climate change and adapt to changes that cannot be avoided.” Prof. Höppe noted that “the Bali Roadmap, which launched negotiations to find a successor to the Kyoto Protocol by 2009 and also indirectly established the corresponding parameter data, is a welcome and positive step”.
The report also indicated that 2007 numbers “among the warmest years since routine measurements began. According to data published by the Hadley Centre in the UK for the period up to December 2007 was the seventh warmest year on record worldwide and the second warmest in the northern hemisphere. This means that the 11 warmest years worldwide have been recorded during the last 13 years.”
On the other hand Munich Re pointed out that “losses due to the North Atlantic hurricane season were relatively low, although the general situation had initially indicated the likelihood of a more severe course of events. Despite 15 named storms in all, in keeping with the average for the current warm phase that goes back to 1995, the number of hurricane-force storms (five) was below the average (eight). This is due to lower-than-expected water surface temperatures in the tropical Atlantic and the counteracting effects of air-current conditions in the upper layers of the atmosphere.
“The relatively low losses can be explained by the tracks of the hurricanes, no major hurricanes reaching the US mainland, as in 2006. The most severe, Hurricane Dean, made landfall as a Category 5 hurricane (the highest category) on Mexico’s Yucatan peninsula. With wind speeds of up to 270 km/h, it was comparable to Hurricanes Rita and Wilma in 2005. Dean caused severe damage in Yucatan and on the islands of the Caribbean, although the main tourist areas were not as seriously affected.”
Jeworrek stated: “All the facts indicate that losses caused by weather-related natural catastrophes will continue to rise. As a leading reinsurer, we are ready to deal with this. Ultimately, however, it is society as a whole which bears the cost – in the form of higher insurance premiums or infrastructure repairs financed by taxes. That is why speedy international action is needed.
“In addition, climate protection can bring huge economic opportunities, thanks to new technologies and increased energy efficiency. This will primarily benefit companies that are swift to act. As we have proved by years of research and new insurance products for renewable energy plants, for instance, we are determined to be among them.”
In terms of overall economic losses, Munich Re singled out the magnitude 6.6 earthquake that struck the Niigata prefecture in Japan on July 16 as the most expensive, with economic losses of around $12.5 billion. “The heavy losses show the economy’s susceptibility when natural catastrophes strike,” Munich Re added. “The world’s largest nuclear power plant, close to the city of Kashiwazaki, was damaged, small quantities of radioactive material escaping into the environment. The earthquake also affected a major automotive component supplier, resulting in a production shortfall of 120,000 vehicles for car manufacturers.”
Munich Re assigns natural catastrophes to one of six categories for assessment purposes. The annual list includes all events with more than ten fatalities and/or losses running into millions. The complete report is available on the Group’s web site at: www.munichre.com.
Source: Munich Re
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