Preliminary Swiss Re sigma estimates of catastrophe losses in 2005: High casualty count and record insured losses of USD 80 billion
20 December 2005, Zurich
According to preliminary estimates, more than 112 000 people died worldwide in natural and man-made catastrophes in 2005. These catastrophes triggered total financial losses of around USD 225 billion, an estimated USD 80 billion of which were insured. This made 2005 the costliest year ever for insurers.
87 000 die in Pakistan earthquake
Earthquakes claimed over 90 000 lives in 2005. On 8 October, an earthquake of 7.6 on the moment magnitude scale shook the district of Muzaffarabad in northern Pakistan. Collapsing buildings and the cold weather that followed caused over 87 000 deaths in Pakistan and neighbouring parts of India. On 28 March, an earthquake of magnitude 8.7 – probably an after-shock of the 26 December 2004 seaquake – shook northern Sumatra, causing over 2 600 fatalities. On 22 February, Iran, too, was hit by an earthquake of magnitude 6.4 which claimed over 600 lives. The high death toll from these events is due to the high seismicity, but also to poor building standards in the regions affected.
Storms and floods added to the casualty count: in February, mudslides following heavy rainfall in Pakistan swept more than 2 000 people to their deaths. More than 1 600 people perished when Hurricane Stan ripped through Central America early in October; Hurricane Katrina claimed 1 200 lives in the US in late August. And in July, floods in India drowned 1 150 people. Over 90% of the 112 000 catastrophe victims worldwide lost their lives in Asia.
Total losses amount to USD 225 billion
Natural and man-made catastrophes in 2005 accounted for USD 225 billion in direct financial losses to buildings, infrastructure and vehicles. Katrina caused widespread flooding and storm devastation whose total economic loss is estimated by Swiss Re's preliminary sigma statistics to be USD 135 billion, followed by Rita and Wilma, which each added a further USD 15 billion. Damage from the mighty earthquake in Pakistan was in the range of USD 5 billion, whereas in December no figure could yet be put on the damage wreaked by the huge fire in an oil depot near London. Of the total losses worldwide, a third was covered by insurance.
Insured losses add up to USD 80 billion
At USD 80 billion, insured property losses were higher than ever before. Almost 90% of this sum was due to storm and storm-related flood damage: Hurricane Katrina alone is expected to cost insurers USD 45 billion. Before 2005, Hurricane Andrew (1992) had been the most expensive catastrophe ever, costing USD 22 billion, followed by the terrorist attack of 11 September 2001 with just under USD 21 billion (at 2005 prices).
Losses of USD 70 billion, or about 88% of all insured catastrophe losses in 2005, were recorded in the US. In the Gulf of Mexico, hurricane damage to oil platforms and drilling rigs triggered high insurance claims. A further USD 6 billion, or 8% of insured losses, stemmed from Europe: Heavy rains in Switzerland, Germany and Austria caused flooding and landslides in August, with insured property and business interruption losses amounting to USD 1.9 billion. And winter storm Erwin in January cost USD 1.5 billion, mainly in Denmark, Sweden and the UK.
The full scale of the catastrophes in 2005 has not yet been fully assessed, but the trend towards very high losses appears to be continuing. This is due at least in part to increasing population densities, higher concentrations of insured values, and construction activity expanding into areas with a high natural-perils exposure. The ongoing warm phase that has been measurable since the 1990s and the recent high hurricane frequency inspire little hope of this trend being reversed anytime soon.
Notes for editors
Swiss Re is one of the world's leading reinsurers and the world's largest life and health reinsurer. The company operates through more than 70 offices in over 30 countries. Swiss Re has been in the reinsurance business since its foundation in Zurich, Switzerland, in 1863. Swiss Re offers a wide variety of products to manage capital and risk. Traditional reinsurance products, including a broad range of property and casualty as well as life and health covers and related services, are complemented by insurance-based corporate finance solutions and supplementary services for comprehensive risk management. Swiss Re is rated "AA" by Standard, Poor's, "Aa2" by Moody's and "A+" by A.M. Best.
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