Half of 2012’s Global Economic Losses Due to U.S. Natural Disasters: Aon

While global economic losses were close to average in 2012, insured losses last year were 36 percent higher than the 10 year average ($72 billion vs. $53 billion) because the two most costly events of the year occurred in the U.S., which has higher than average insurance penetration.

The two major U.S. natural peril events, Hurricane Sandy and a year-long drought, accounted for two-thirds of all 2012 insurance losses globally and nearly half of all economic losses for the year, according to The Annual Global Climate and Catastrophe Report.

The report also reveals that 295 natural peril events occurred worldwide in 2012 (compared to 257 in 2011), causing total economic losses of $200 billion, only slightly above the 10-year average of $187 billion.

Impact Forecasting, the catastrophe model development arm of Aon Benfield, which publishes the Annual Global Climate and Catastrophe Report, has launched a new website, Catastrophe Insight, www.aonbenfield.com/catastropheinsight, which provides 10 years of catastrophe data, including economic and insured losses across nine key natural perils.

The web site features charting functions and annual top 10 catastrophe loss tables from 2005-2012.

In 2012, overall insured losses were significantly lower than the record 2011 insured loss of $133 billion.

“Despite growing support for ‘the new normal’ theory of a world dominated by rapidly escalating global catastrophe losses, our study highlights that 2012 returned to a more normal level of losses after the extreme economic and insured losses of 2011,” said Stephen Mildenhall, chief executive officer of Aon Benfield Analytics.

“While nominal catastrophe losses are increasing at an alarming rate, economic losses as a percent of global GDP – a measure appropriately normalized for inflation and economic development – has remained relatively stable over the past 30 years. The moderate level of catastrophe losses for 2012 is reflected in strong growth in reinsurer capital during the year.”

Hurricane Sandy was the costliest single event of the year to date, causing an estimated $28.2 billion in insured losses across private insurers and government-sponsored programs, and approximately $65 billion in economic losses across the U.S., the Caribbean, the Bahamas and Canada.

The most deadly event of 2012 was Super Typhoon Bopha, which killed more than 1,900 people after making landfall in the Philippines.

A total of 14 tropical cyclones made landfall globally in 2012, compared to a long-term average of 16. Major flooding affected China and the United Kingdom, with other floods recorded elsewhere in Asia, Europe and Oceania.

Two earthquakes struck Italy causing considerable damage in the Emilia-Romagna region.

In 2012, Europe, Asia and North America (outside the U.S.) all sustained aggregate insured losses above $1 billion due to flooding, earthquakes and tropical cyclones. Losses in Asia and Oceania were well below their recent 10-year averages, and Europe was slightly below its average.

According to Steve Bowen, senior scientist and meteorologist at Impact Forecasting, after a year in which Asia and Oceania sustained significant natural disaster losses, the focus shifted back to the U.S. in 2012 as the country was hit by nine separate billion-dollar insured loss events, including Hurricane Sandy and the most extensive drought since the 1930s.

Bowen said tornado activity was “dramatically lower than 2011, which can partially be attributed to the drought.”

Also, U.S. severe weather losses were close to the recent five year average and 46 percent less than the record losses seen in 2011.

Finally, 2012 marked the seventh consecutive year that no major hurricane made landfall in the U.S.; a streak not seen since the 1860s, according to Bowen.

Records show that 2012 ended as the eighth warmest year in world history since global land and ocean temperature records began in 1880.