NU Online News Service, March 29, 12:00 p.m. EDT

Last year was a costly one in terms of dollars and human life as insurers saw their losses from catastrophes increase by 59 percent from the previous year, according to a Swiss Re report.

The Zurich, Switzerland-based insurer's report, “Natural Catastrophes and Man-made Disasters in 2010,” states that insurance claims from 304 catastrophe events in 2010 cost the industry in excess of $43 billion, compared to $27 billion in 2009.

Swiss Re says 2010 is ranked as the seventh costliest year for insurers, but is not close to 2005, the year of Hurricane Katrina, when catastrophe losses exceeded $117 billion.

Natural catastrophes consumed the bulk of the cost to insurers at about $40 billion, the company says, while man-made disasters consumed $3 billion.

But those costs paled in comparison to the overall economic loss that stood at $218 billion. The catastrophes also took 304,000 lives.

Earthquakes accounted for the bulk of the losses. The earthquake in Chile cost insurers $8 billion and claimed 562 lives, while New Zealand cost insurers $4 billion with no fatalities.

Adding to the loss count, winter storm Xynthia that struck northwestern Europe led to insured losses of $2.8 billion and 64 deaths.

Also on the list:

• Major U.S. storms cost insurers $2 billion.
• Floods in Australia triggered approximately $2 billion in claims.

“Although no long-term trend of increasing global earthquake activity has emerged, the number of fatalities and insured losses from earthquakes are on the rise,” says Balz Grollimund, one of the study's authors, in a statement. “The main reasons are population growth, the higher number of people living in urban areas as well as rising wealth and rapidly  increasing exposures. Many of these rapidly growing urban areas are located in seismically active areas.”  

Swiss Re points out that earthquake losses for 2011 will also be above average as the total insured claims for the Feb. 22 earthquake in Christchurch, New Zealand, are estimated to be between $6 billion and $12 billion.

The massive Tohoku earthquake that struck Sendai, Japan, on March 11 is also expected to trigger significant insured losses, Swiss Re notes.

Catastrophe modelers have given insured loss estimates from the event as high as $30 billion.

In the report, Swiss Re notes some surprises, saying that industrial exposure in Chile comes as a “surprise and warrants review of the way the insurance industry assesses and models certain industrial risks.”

This is especially true of business-interruption claims that accounted for half of insurance claims payouts. For some industries, such as pulp and paper, business interruption accounted for two-thirds of the claims.