Cat trends on the rise; floods at the crest of the wave

Catastrophe-related economic losses from natural and man-made events around the world exceeded US$70 billion in 2007 US$28 billion of which were insured losses marking a trend towards an increase in the number and cost of natural and man-made events, says Swiss Re research. According to Swiss Re’s latest sigma study, “Natural Catastrophes and Man-made Disasters in 2007,” 142 natural catastrophes and 193 man-made disasters occurred in 2007, with Europe bearing the brunt of the insured property losses, a release says.Winter storm Kyrill and flooding in the U.K. caused a combined insured loss of US$10.9 billion, while in the United States, a storm system in the mid-west and forest fires in California led to damages of more than US$2.6 billion.”Long-term figures indicate a steep upward trend, particularly in flood losses,” Rudolf Enz, one of the authors of the study, said. “Since 1970, losses have risen annually by an average of 12% (7% when adjusted for inflation). This translates into a doubling of the nominal burden in just over six years.”Over the past few years, insurers have been working to adapt their models to the new data and findings, especially since their flood loss models are flawed, the release notes.Most flood models rely heavily on data from the 1960s to the 1980s, when the frequency of flooding in Europe was below the norm. As a result, the current event frequency is under-weighted in most flood models.