Unusually low natural catastrophe losses in 1H in Asia Pacific

Thursday, 19 July 2012 00:00 - - {{hitsCtrl.values.hits}}

Natural catastrophe (Nat CAT) losses were relatively moderate in the Asia-Pacific region in the first half of 2012, which contrasts sharply with the record economic losses of last year when 77% of the losses came from the Asia-Pacific, says a statement released by Munich Re.

Up to the end of June 2012, overall global losses totalled US$26 billion, of which approximately US$12 billion was insured. The loss statistics were dominated by natural hazard events in the United States which accounted for nearly 85% of total insured losses worldwide, as a result of tornado outbreaks and wildfires.

Although there were some 200 loss events in the Asia-Pacific region, these were for the most part minor. Despite constituting about half the number of global natural hazard loss events, they accounted for only about 4% of worldwide insured losses and 23% of overall losses. In the past, from 1980 to 2011, they have represented an 18% share of insured losses and a 45% share of overall losses.

The most serious event in the region in the first half of this year was flooding, which affected a number of provinces in southeast China in May and June, causing overall losses of US$2.5 billion and claiming some 120 lives. The insured losses from this catastrophe were small due to the low level of insurance penetration. At the end of February 2012, torrential rainfall in New South Wales, Australia, caused the overflowing of rivers which burst the Warragamba Dam west of Sydney. Several thousand homes were damaged and 15,000 people were evacuated. The overall losses amounted to US$500 million, and insured losses were in the order of US$120 million.

Worldwide losses up to the end of June 2012 were also well below the six-month average of recent years. Losses for the first six months amounted to US$26 billion, compared with a 10-year average of US$75.6 billion for the corresponding period. Insured losses for the first six months of 2012 amounted to US$12 billion, compared with a 10-year average of US$19.2 billion. Although there were some 3,500 deaths from natural catastrophes this year to date, this is well below the average of 53,000 for the last 10 years.

About 450 natural hazard loss events occurred in the first six months of 2012 but there were no major catastrophes like those of 2011, when overall losses for the first half of 2011 itself had amounted to US$302 billion and insured losses to just under US$82 billion. “Losses in the first half of 2012 were comparatively low. It is in line with expectations that extreme and more moderate years will balance each other out in the course of time,” says Munich Re Board member responsible for global reinsurance Torsten Jeworrek. “The role of insurers is to set premiums appropriate to the risks in the long term, taking into account all such fluctuations. In this respect, insurers can also do something towards mitigating the loss burdens by providing comprehensive information and offering specific prevention incentives for reducing the vulnerability of buildings and infrastructure to damage.”