Inexpensive 2013 illustrates low penetration
2013 was an inexpensive year for insurers globally in terms of losses stemming from disasters despite some bumper flood losses, the fact that economic losses were high and some 25,000 lives were lost.
The dynamic illustrates the problem of low insurance penetration in many parts of the world – a dynamic that represents an opportunity for insurers.
Insured losses from natural catastrophes and man-made disasters in 2013 are estimated to be around $44 billion, according to sigma, the research division of Swiss Re. This was substantially lower than the $81 billion in the industry paid out in 2012.
The bulk of the losses – $38 billion – stemmed from natural catastrophes while losses from man-made disasters generated the remaining $6 billion.
But overall economic losses from this year's catastrophic events were much higher reaching $130 billion, compared with $196 billion in 2012. The total loss of life also climbed to around 25,000 from 14,000 last year.
Much of this loss of life stemmed from Typhoon Haiyan which hit the Philippines in November with some of the strongest winds ever recorded, heavy rains and storm surges.
Haiyan claimed more than 7,000 lives – the highest loss of life from a single event in 2013. Despite this, insured losses are expected to be modest as insurance penetration is low in the country.
The year also saw some of the worst floods ever recorded causing extensive damage across all continents. The flooding that affected large areas of central and eastern Europe in June 2013 created overall losses of $18 billion, with insured losses estimated at $4 billion. The June flooding ranks as the second most expensive fresh water flood event on sigma records, but is a distant second to the 2011 Thailand flood which led to insured claims of over $16 billion.
Also in June, rain-induced flooding hit Alberta, Canada, causing insured losses of nearly $2 billion, the highest ever recorded in the country for any disaster. There were also heavy rains and floods in Australia, India, China, Indonesia, Southern Africa and Argentina in 2013.
In addition to floods, Europe suffered a number of other severe weather events, including hail and windstorms. Hailstorm Andreas battered Germany and France in July, resulting in insured losses of $3 billion.
Later in the year, Windstorm Christian in central and northern Europe is estimated to have caused more than USD 1 billion in insured claims. The more recent Windstorm Xaver in the same region has triggered additional insured losses of around $1 billion.
“In many parts of the world, insurance penetration remains low. Together with preventative measures, insurance can lessen the destructive impact and financial burden that large catastrophic events can have on people's lives,” said Kurt Karl, chief economist at Swiss Re. “It can also help accelerate reconstruction efforts, as we have seen in areas where insurance penetration is higher.”
