US losses dominate insurers’ 2012 bills
Some 90 percent of all insured losses globally in 2012 occurred in the US – highlighting the continued importance of this market to the insurance industry globally and its influence over capital levels and rates.
The research was conducted by Aon Benfield’s subsidiary Impact Forecasting. The study also showed that the two largest global natural catastrophes of 2012 – Hurricane Sandy and a year-long drought – both occurred in the US. In total, these two events accounted for nearly half of global economic losses but, owing to higher insurance penetration in the US, 67 percent of insured losses globally.
Hurricane Sandy was the costliest single event of the year causing an estimated $28.2 billion insured loss and approximately $65 billion in economic losses across the US, the Caribbean, the Bahamas, and Canada.
In terms of economic losses, five out of ten of the top ten economic loss events for 2012 were in the US. Those five events combined to cause around $25 billion in economic losses in total. The US also endured the most billion-dollar-plus events in 2012 with 11 events, the second highest total since 1980, according to data from Impact Forecasting.
The research also highlighted that while catastrophe losses are increasing, economic losses as a percent of global GDP – a measure used to account for inflation and economic development – have remained relatively stable over the past 30 years. This has allowed reinsurers to rebuild their capital following the heavy losses endured in 2011.
“The moderate level of catastrophe losses for 2012 is reflected in strong growth in reinsurer capital during the year,” said Stephen Mildenhall, chief executive officer of Aon Benfield Analytics.