Even though property and casualty insurers had to contend withrelatively few hurricanes and other extreme catastrophes in 2007,the increased prevalence of smaller natural disasters throughoutthe year resulted in a 50 percent increase over 2006's worldwideinsured losses.

That's according to a report from Munich Re, one of the world'slargest reinsurers. These figures might be surprising, especiallyconsidering the fact that both 2006 and 2007 failed to featuretypical large-loss scenarios like those in 2004 and 2005, whenmultiple hurricanes devastated the Gulf and Florida coasts. So whythe 50 percent jump? Munich Re attributed it to activity level,saying that 950 natural catastrophes were reported last year, thehighest number since 1974 and 100 more than in 2006.

Specifically, Munich Re said that worldwide catastrophe lossesreached $75 billion in 2007, with $30 billion of that recorded asinsured losses. In comparison, the company said that 2006 had $50billion in catastrophe losses, with just $15 billion covered byinsurance. Placed in recent historical context, however, and itbecomes clear that while 2007 might have featured the most eventsin several decades, it still failed to approach the loss levels of2005, the year of Hurricane Katrina. In that year, insured lossestopped $220 billion.

“The figures confirm our expectations and endorse our insistencethat risks be consistently written at adequate prices, despiteyears with comparatively low losses as in 2006,” said Dr. TorstenJeworrek, Munich Re board member, in a release. “The trend inrespect of weather extremes shows that climate change is alreadytaking effect and that more such extremes are to be expected in thefuture. We should not be misled by the absence of mega catastrophesin 2007.”

Munich Re said that the most severe events in terms of insuredlosses occurred in Europe, peaking last January with Winter StormKyrill, an event that had wind speeds that topped 60 mph and gustsup to 120 mph. The storm, which largely affected Poland, the CzechRepublic, and Austria accounted for nearly eight percent ofworldwide catastrophe losses. Flooding in England and heavyhailstorms/tornadoes in Germany also significantly affectedworldwide insured losses.

“All the facts indicate that losses caused by weather-relatednatural catastrophes will continue to rise,” continued Jeworrek.“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 infrastructurerepairs financed by taxes.”

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