13 July 2011

Losses from Natural Hazards in Q1&2 2011

Posted by Dave Petley

The insurance giant Munich Re yesterday put out a press release about losses from natural perils for the first six months of the year.  The picture that they have painted makes grim reading.  In a nutshell, with half of the year remaining and the hurricane season only just getting under way, 2011 has already claimed the record for the highest-ever level of losses.  Economic losses are estimated to be US$ 265bn, which exceeds the total figure of US$ 220bn for 2005, the previous costliest year. In the supplemental information they have provided a map to show the distribution of the loss-inducing events:

However, there are a number of interesting aspects to this information.  First, the losses in terms of numbers of events (n=355) is below the 2001-10 average (n=390), as is the number of fatalities (2010: 19,380; 2001-10 average: 52,900).  However, the map above shows the impact of meteorological events (i.e. storms in the USA and Europe, which has been significant.  Of course the statistics for 2011 are dominated by the 11th March 2011 earthquake in Japan (15,500 deaths, $210 billion in economic losses).

Second, in interviews associated with the press release they have explicitly highlighted the role of climate change in driving up losses from natural catastrophes.  For example, MSNBC has this article, which quotes Peter Hoppe, the head of Geo Risks Research at Munich Re, as saying that (in the words of the article):

Munich Re has factored in increased population, and thus more property, to see if those are behind the rise in economic losses.  But the data show those alone “cannot explain” the increase, “so there is a significant trend in these losses,” he said.  Natural events like La Nina and El Nino, ocean cycles that alter weather systems, are certainly factors as well, but warming temperatures appear to be adding a layer “on top” of that natural variability, Hoppe said. He also cited a climate connection between Australia’s severe floods and rising ocean temperatures off the coast there. That means “more evaporation and higher potential for these extreme downpours,” he said.  “It can only be explained by global warming,” he added.