Property-casualty insurers' catastrophe losses in 2006 were the lowest in 19 years at $15.9 billion, when adjusted for inflation, according to Swiss Re's latest sigma study.

The Zurich-based reinsurer said last year's catastrophe loss total was low despite a recorded 349 natural catastrophes and man-made disasters because most of them impacted developing countries with low property values. The disasters killed more than 31,000 people.

Low insurance penetration in developing countries also meant that only one third of $48 billion in economic losses in 2006 was actually covered by insurance, Swiss Re said. Overall, the study found 2006 brought property insurers the third lowest catastrophe losses of the past 20 years–only 1997 and 1988 were less expensive (after allowance for inflation).

The breakdown of insured losses was $11.8 billion for natural catastrophes and $4 billion for man-made disasters, according to the report.

Low catastrophe loss figures, Swiss Re said, were attributable mainly to the calm hurricane season in the United States and the absence of any highly damaging events in Europe.

The report listed three events that ran into the billions: two U.S. tornados in April and a typhoon in Japan in September.

But Swiss Re warned that in future higher insured losses can be expected following a rising trend, due mainly to weather-related catastrophes.

The report also noted the increasing concentration of property values and urban encroachment into highly-exposed regions. Swiss Re said the effects of global warming are also likely to aggravate the loss situation and climatologists assume that shifting climate zones could lead to weather events previously restricted to extreme regions, spreading to other parts of the world.

The company noted that insurers have modified their catastrophe simulation models, where appropriate, to bring them into line with higher expected damage– especially in the light of the record losses in 2004 and 2005 and an increasingly volatile climate.

The company noted that its sigma reports now take into account National Flood Insurance Program flooding damage in the United States. As a result of this change, it said the insured loss of Hurricane Katrina, for example, has been revised upward to $66 billion compared to and earlier figure of $49 billion without NFIP.

Special Reports /

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