Photo of Japan earthquake damage

Sigma 2/2012: Natural catastrophes and man-made disasters in 2011

Natural catastrophes and man-made disasters caused not only human hardship and the loss of thousands of lives, but also staggering overall economic and insured losses in 2011. Throughout these events, the insurance industry solidified its key role in risk management and post-disaster recovery financing.

Sigma 2/2012, “Natural catastrophes and man-made natural disasters in 2011,” details a year that saw the highest economic losses in history, the highest insurance earthquake losses, and the highest insured losses ever for a single flood event.

Earthquakes in Japan, New Zealand, and Turkey, as well as floods in Australia and Thailand brought massive destruction and loss of life in 2011.

In total, economic losses totaled USD 370 billion and of that, insured losses of USD 116 billion. There were 325 catastrophic events in 2011: 175 were natural catastrophes and 150 were man-made disasters. Approximately 35,000 people died in catastrophic events in 2011. Some 19,000 perished during the March 2011 Japan earthquake.

Earthquakes cause extensive damage

According to sigma 2/2012, the Japan earthquake cost the insurance industry an estimated USD 35 billion, making it the most expensive earthquake on record.  Due to the country’s low insurance protection, the industry will only bear 17% of total losses.

On the other hand, New Zealand’s high insurance penetration means that insurance companies will shoulder 80% of the economic losses, or USD 12 billion. The February 2011 quake is the third most expensive in history.

High flood losses

The early 2011 flooding in Australia caused over USD 2 billion in insured claims. However, insurance claims from flooding in Thailand are estimated to be the highest ever for a river water flood event at USD 12 billion.

“The flooding in Thailand is a painful reminder that, given the high risk of flooding in many countries, other parts of the globe could be prone to similar or even bigger losses,” says Swiss Re Head of Flood and sigma 2/2012 co-author Jens Mehlhorn.

Post-disaster financing and innovation

Despite historic insured losses and the challenging financial environment, the insurance industry remained solid during the extreme events of 2011. It resisted well financially and was able to play a key role in bringing much-needed funds to affected areas. 

Last year’s disasters revealed an increase in risk accumulation, especially in emerging markets, and highlighted the lack of consistent flood hazard information. To this end, Swiss Re is updating CatNet®, its natural hazard information system, with more detailed river flood hazard zones. The release is scheduled for April 2012 and will offer more accurate flood risk assessment on a global level.

Find out more

Download “Natural catastrophes and man-made natural disasters” from the sigma homepage and watch the video interview  with co-authors Jens Mehlhorn and Lucia Bevere.

To subscribe to sigma, please contact your Swiss Re client manager.

Image: Damage from Japan earthquake, 2011

Published 28 March 2012

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