Windstorms and floods dominate 2002 cat losses: Munich Re

Most of the insurance industry’s losses due to catastrophes last year were the result of windstorms and floods, says a new study from Munich Re. A full 98% of natural catastrophe payouts went to such losses, the reinsurance giant calculates.The European floods last summer constituted the worst of the cats, leading to about US$3 billion in insured losses of a total US$18.5 billion in economic loss.Windstorm Jeanett, which hit Europe in October, is estimated to cost insurers US$1.5 billion, in some areas hitting harder than 1999’s Lothar storm.Last year was an average cat loss year for insurers, who paid out US$11.5 billion by Munich Re estimates, although economic loss rose to US$55 billion. But there are signs of growing problems, including the potential return of El Nino conditions. Sever droughts in Australia and North America were followed by recent heavy storm conditions, including severe winter weather in the midwest and east coast of the U.S. around Christmas. The last El Nino event led to the 1998 ice storms that devastated Quebec and eastern Canada.Munich Re estimates 700 cat events last year, causing 11,000 deaths. Of these, 70 were earthquakes which cost thousands of lives, but only US$11 million in insured losses.Precipitation was also a factor, with 2002 showing record levels, as well as being among the warmest years on record, which Munich Re says is an indication of the mounting threat of global warming. They study suggests weather-related concerns should grow moving forward. “Catastrophe losses are mostly caused by extreme weather events. This was the case in 2002 too,” says Dr. Gerhard Berz, head of Munich Re’s Geo Risks Research Department. “The experience that has been gathered over the years shows that buildings and infrastructure are usually not sufficiently designed to cope with the high strains of extreme weather events. The evidence points to critical extreme wind speeds and precipitation being exceeded with increasing frequency, so that for this reason alone there will inevitably be a stark increase in the loss burdens as well.”