Asia tsunami disaster
26 December is becoming a memorial day for too many tragic events: in 2003 an earthquake destroyed Bam in Iran, and in 1999 the winterstorm Lothar devastated parts of France, Switzerland and Germany. On that day this year, the powerful tsunamis triggered by a massive undersea earthquake near Indonesia swamped coastal areas in at least nine countries around the Indian Ocean. Tens of thousands of lives have already been lost in this awful tragedy, which has devastated a number of the world's poorest regions.
Last update: 25 January 2007
Profile
| Event date | 26 December 2004 |
|
Affected areas |
Bangladesh, India, Indonesia, Kenya, Malaysia, Maldive Islands, Mauritius, Myanmar (Burma), Tanzania, Thailand, Reunion, Seychelles, Somalia, Sri Lanka |
|
Fatalities |
220'000 |
|
Injured |
> 142'000 |
|
Insured loss |
USD 2 000 000 000 |
|
Economic loss |
USD 15 000 000 000 |
The sheer scale of the event and the absence of comparable historical events will make it difficult to obtain an immediate overview of losses incurred. Swiss Re is investigating the insurance implications, but the situation is more complex with this type of disaster than with more familiar catastrophe scenarios. While highly sophisticated modelling techniques are widely used to determine tropical cyclone or conventional earthquake shock losses, this is not the case with tsunamis. Particularly if they are of the scale witnessed on 26 December, tsunamis are not only extremely rare - no major tsunami has hit a densely-populated area in the past forty years - but they also have far more complex characteristics than eg the more frequently occurring windstorms. This recent event was also highly unusual in its range, bringing death and destruction to coastal areas around the Indian Ocean.
Another reason why tsunamis and their loss potential are difficult to assess is that they can be unleashed by a variety of causes, such as an earthquake, a volcanic eruption, a landslide or meteor impact. This makes it difficult to estimate the frequency, point of origination and dimensions of a major tsunami event. Further aggravating factors are the water run-up characteristics, which vary greatly depending on the shape of the shoreline and the seabed. An adequate assessment being virtually impossible for these reasons, Swiss Re does not explicitly model the tsunami risk, but includes a tsunami exposure charge aligned to the modelled earthquake shock losses.
Since communications links have also been affected by the event, information from the affected areas is limited and no reliable assessment can be made at present. Even so, most of the insured losses are likely to concern property damage and business interruption in tourism. Marine hull and cargo lines will also add to the total, while other lines, such as travel, accident and life covers are likely to be affected to a lesser extent. Swiss Re currently estimates its claims related to the tsunamis to be below CHF 100 million.
The massive tsunami is the latest disaster in a year marked by a string of natural catastrophes. Even excluding this event, the year 2004 is likely to cost an estimated USD 40 billion in natural catastrophe claims for the insurance industry, making it a record year before 2001 with a claims burden of USD 37 billion.
