While 2007 was not a landmark year in terms of catastrophes, statistics show an upward trend in the number and cost of natural and manmade disasters, according to a recent Swiss Re sigma study.
The study says that worldwide there were 143 natural catastrophes and 193 manmade disasters in 2007. These resulted in the loss of 20,000 lives and $70 billion in economic losses. Property insurers paid out $28 billion in insured losses.
The top five most costly events in terms of insured losses were all natural catastrophes. In total, insurers paid out over $23 billion for natural catastrophes in 2007, Swiss Re found.
Rudolf Enz, one of the study's authors, said in a statement that Europe took the worst hit, absorbing the top three most costly events for insurers for the year. Winter Storm Kyrill led the way, causing $6.1 billion in losses in January. Additionally, two instances of heavy rains and flooding in the summer caused $4.8 billion in insured losses in the U.K.
The study noted that the U.S. experienced a mild year for natural catastrophes in comparison to previous ones. A storm in April resulted in the largest U.S. insured losses–$1.6 billion. Forest fires in California in October caused over $1 billion in losses. These two occurrences were the fourth and fifth largest events with respect to insured losses.
Insurers paid out more than $4 billion for manmade disasters. Major industrial fires, explosions, and aviation and spacecraft losses led the way with respect to monetary losses. Shipping and boating accidents, bombings, and social unrest caused the majority of the 6,900 deaths.
In terms of lives lost overall, four of the top five occurrences were natural catastrophes involving heavy rains and flooding. They occurred in Bangladesh, India and North Korea. The worst of these four events happened in November and claimed 4,234 lives. Riots and arson after a disputed election in Kenya caused 600 deaths, and was the only manmade event to crack the top five.
Looking forward, Mr. Enz said he expects higher losses in future years. "Since 1970, losses have risen annually by an average of 12 percent (7 percent when adjusted for inflation)," Mr. Enz said.
He added that these losses will especially be seen as a result of flooding. The study notes that insurers should update their flood models, as many of them rely on data from the 1960s and 1980s, when flooding was below the norm.
Kurt Karl, Swiss Re's head of economic research consulting in New York, said that while the bulk of the flooding this past year was seen in Europe, there has been recent significant flooding in the U.S. and in Asia where there has been tsunami activity.
Increased volatility in weather has contributed to the higher incidences of flooding. Mr. Karl said, "Obviously, if you have a quarter inch [of rain] a day for 20 days, it's very different than if it's all bunched up into one day, and we're seeing increased volatility in weather."
Explaining the overall increase in projected losses for the future, Mr. Karl said the problem is twofold. "At least an element of it is climate change," he said, "and a big factor, of course, is simply people moving to the coast, and the buildup along disaster areas–not just in the United States but other parts of the world." The majority of this development, he noted, is occurring in the United States.
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