Storms, Floods Led Cat Losses In 2002

NU Online News Service, March 13, 2:23 p.m.EST?Storms and floods were the drivers of naturalcatastrophe losses worldwide in 2002, according to MunichReinsurance Co.

In its annual study of natural-catastrophe trends, the Munich,Germany-based reinsurer said insured losses from naturalcatastrophes amounted to $13 billion last year, a jump of 13percent from $11.5 billion losses in 2001.

Zurich, Switzerland-based reinsurance giant Swiss Re also issuedsimilar findings in its new study, which said floods caused recordlosses in 2002, costing insurers worldwide $4.1 billion.

Munich Re said significant natural-catastrophe events in theUnited States included tornadoes in April, which caused $1.6billion in insured losses, and storms in November, which resultedin $460 million losses.

One of the main reasons for the steep increase in naturalcatastrophe losses observed worldwide in recent decades, the reportstated, is the mounting concentration of people and property valuesin exposed cities and metropolitan areas.

"Statistics show that, even when adjusted for inflation, thelosses caused by natural catastrophes have been increasingdramatically and at an ever-quickening pace in the period since1950," said Munich Re in its report. "One of the main reasons forthis is the concentration of people and property values in urbancenters--a concentration that is most pronounced in themegacities."

The report found that the insurance industry is exposed to thisdevelopment to an even greater degree than the economy as a wholebecause insurance density in urban areas is usually much higherthan in more rural areas.

The report warned that even greater perils loom for theinsurance industry in the world's largest urban areas, wheregrowing economic density threatens to make future catastrophes muchmore costly.

The reinsurer also announced the launch of a new index calledMegacities, which measures risk potentials of the world's 50largest metropolitan areas. The index ranks the Tokyo-Yokohama areain Japan as the riskiest megacity in the world, followed by SanFrancisco Bay, Los Angeles, Japan's Osaka and Kobe-Kyoto, andMiami.

Swiss Re, in its report called "Natural Catastrophes andMan-Made Disasters in 2002," added that last year marked the returnof natural catastrophes outweighing man-made disasters, a trendthat was broken in 2001 because of the Sept. 11 terror attacks.

Furthermore, Swiss re noted that some countries are underinsuredagainst flood losses.

"Developing and introducing comprehensive flood cover is a majorchallenge. A carefully balanced private-public partnership could bein the best interests of the public and private sector," accordingto the report.