Cyclone Nargis, which caused massive destruction and 15,000 reported deaths in Myanmar, caused little in the way of insured losses, a catastrophe modeling firm said.

Domenico del Re, senior model manager at Newark, Calif.-based Risk Management Solutions, said, “This event is a massive humanitarian disaster. However, it is a catastrophe that the international insurance industry has escaped.”

Mr. del Re explained, “Insurance is greatly underdeveloped in Myanmar, with no international insurance brokers operating in the area and non-life premiums of barely $5 million in 2004.”

“Disasters such as these,” he cautioned, “should be taken as a wakeup call to the global insurance industry, as companies extend their portfolios outside areas where the understanding of risks and their quantification is well-established.”

He noted, “Given the isolation of the country, international investment in Myanmar is also very limited. The most significant foreign interest in the region is a large gas field in Yadana, which generates millions of cubic feet of gas a day and is close to the path of the cyclone, but it is not yet known whether the production has been interrupted.”

RMS said Nargis made landfall Friday in the Irrawaddy delta region in Myanmar with maximum sustained winds near 132 mph, the equivalent of a Category 4 storm on the Saffir-Simpson Hurricane Scale.

As the cyclone tracked inland on Friday night it moved directly over the former capital and largest city in Myanmar, Yangon, with maximum sustained winds near 80 mph, the equivalent of a Category 1 storm on the Saffir-Simpson Hurricane Scale, RMS reported.

The firm noted widespread destruction and thousands of fatalities in Myanmar, with severe damage sustained in Yangon, and a state of emergency declared in five regions: the city of Yangon, Irrawaddy, Pegu and the states of Karen and Mon–home to around 24 million people.

Foreign Minister Nyan Win reported a death toll of 15,000 today, and RMS said if this is correct, it will be the highest number of fatalities from a natural disaster since the December Tsunami in 2004.

The firm said that while preliminary reports indicate the number of homes affected is in the tens of thousands, it may take several weeks before the exact number of buildings destroyed comes to light.

According to RMS, Nargis is the first storm of the year to impact the Bay of Bengal. Last November, Tropical Cyclone Sidr devastated the low-lying delta regions in Bangladesh.

RMS said Nargis and Sidr highlight how vulnerable low-lying delta regions are to flooding caused by rainfall and storm surge from tropical cyclones. It pointed to the Mekong Delta in Vietnam as another area at risk in the region.

A report by Myanmar state radio later released a death toll above 22,000, with more people still missing.

Special Reports /

Insured Loss Seen Minimal After Myanmar Cyclone

Related Stories

Recommended For You