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 natural catastrophe losses worldwide in 2002, according to Munich Reinsurance Co.

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

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

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

One of the main reasons for the steep increase in natural catastrophe losses observed worldwide in recent decades, the report stated, is the mounting concentration of people and property values in exposed cities and metropolitan areas.

"Statistics show that, even when adjusted for inflation, the losses caused by natural catastrophes have been increasing dramatically and at an ever-quickening pace in the period since 1950," said Munich Re in its report. "One of the main reasons for this is the concentration of people and property values in urban centers--a concentration that is most pronounced in the megacities."

The report found that the insurance industry is exposed to this development to an even greater degree than the economy as a whole because insurance density in urban areas is usually much higher than in more rural areas.

The report warned that even greater perils loom for the insurance industry in the world's largest urban areas, where growing economic density threatens to make future catastrophes much more costly.

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

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

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

"Developing and introducing comprehensive flood cover is a major challenge. A carefully balanced private-public partnership could be in the best interests of the public and private sector," according to the report.

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Storms, Floods Led Cat Losses In 2002

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