on March 29, 2013 by admin in Insurance Industry, Comments (0)

Despite High Losses, Insurance Industry Weathered 2012 Disasters, Swiss Re …

Bloomberg BNA -- Natural catastrophes and human-induced disasters caused $186 billion in economic losses in 2012 and $77 billion in insured losses, making it the third-costliest year on record for insurers, according to a March 27 report by the reinsurance firm Swiss Re.

Nine of the 10 most expensive events, in terms of insured losses, occurred in the United States in 2012, with Hurricane Sandy ranking as the most expensive event, according to Natural Catastrophes and Man-Made Disasters in 2012: A Year of Extreme Weather Events in the U.S.

The high dollar amount of insured losses does not necessarily mean insurance companies will raise their premiums or pull out of certain markets, a Swiss Re economist told BNA.

“Despite the magnitude of the events in the U.S., the insurance and reinsurance industry was able to digest the losses without causing a major disruption,” Thomas Holzheu, U.S. chief economist for Swiss Re, said in an email statement.

Even Hurricane Sandy, which cost $70 billion in economic losses and $35 billion in insured losses, was not outside of the scope of current insurance modeling, Holzheu said. “While Sandy was unique in many ways, a loss of this magnitude was well within the realm of the standard [catastrophe] models,” he said.

Related News: 

By contrast, past catastrophes such as Hurricane Andrew and the Sept. 11, 2001, disaster, changed how insurers conducted modeling and did underwriting and caused market disruptions, he said.

Storms May Increase in Frequency

Matthias Weber, chief underwriting officer for Swiss Re, said in a statement that events combining record wind and storm surge like Hurricane Sandy may increase in frequency. Sea level rise of 10 inches will almost double the probability of extreme flood losses, meaning they will occur more often than currently expected, Swiss Re said.

Responding to natural catastrophes and human-induced disasters requires partnerships between private and public organizations, said Megan Linkin, a natural hazards expert for Swiss Re. Swiss Re works with global governments to increase their understanding of their exposure to natural catastrophes and provides insurance products for after events occur, she told BNA in an email March 27. For example, the company has recently worked with the state of Alabama to offset financial losses from hurricanes, she said.

Insurance companies also share their knowledge about improving building codes and pursuing urban development that addresses threats posed by climate change, Linkin said.

2011 Most Expensive Year on Record

The most expensive year on record for insured losses was 2011, when record earthquakes and flooding in the Asia Pacific region caused more than $126 billion in insured losses, according to the report.

A March 7 report by the investor group Ceres found that a majority of insurers lack a comprehensive plan to address climate change risks. The report found that Swiss Re was one of the insurance companies better prepared for climate change.

For more about Bloomberg BNA, click here

www.bloomberg.com/sustainability for the latest from Bloomberg News about energy, natural resources and global business.

Article source: http://www.bloomberg.com/news/2013-03-28/despite-high-losses-insurance-industry-weathered-2012-disasters-swiss-re-says.html

Tags: , ,

No Comments

Comments are disabled.