Natural catastrophes and man-made disasters in 2001
No. 1/2002
Natural catastrophes and man-made disasters in 2001: man-made losses take on a new dimension
Swiss Re’s latest sigma study reports man-made and natural catastrophes claimed more than 33 000 lives worldwide in 2001. At USD 34.4 billion, the burden on property insurance due to catastrophe losses was extremely high – with an estimated USD 19 billion incurred by property and business interruption losses arising from the 11 September event. Furthermore, the insurance industry is having to cover liability and life insurance losses related to the attack which are estimated between USD 16.5 and 39 billion.
More than 33 000 people lost their lives in catastrophes in 2001. The estimated death toll for the earthquake in Gujarat, India alone was 15 000, while 3000 lost their lives in the terrorist attack of 11 September on New York’s World Trade Center and Washington.
According to the sigma study, 2001 would have gone down as an average loss year had it not been for 11 September. This event confronted the insurance industry with an entirely new loss dimension. Until 2001 only natural catastrophes such as Hurricane Andrew, which ran up losses of USD 20.2 billion or the Northridge, CA, Earthquake, which resulted in losses of USD 16.7 billion (at 2001 prices) had caused losses of this magnitude. This terrorist attack has brought to light a new dimension of threat to the insurance industry, bringing terrorism covers into question. The traditional insurability criteria – quantifiability, randomness, diversifiability, risk-adequate pricing and conditions – are not satisfied in the current situation. According to the sigma study, a solution consists of an insurance approach with following elements: state as insurer of last resort, mandatory direct insurance. This could take the form of a combination of state and private insurance resources for a transition period, until the insurance industry has accumulated the necessary insurance capacity to cover – limited – terrorism risks.
Over the long term, despite the new dimension of threat, it is mostly natural catastrophes, i.e. storms, floods and earthquakes, which burden the insurance industry. The trend towards higher losses continues in view of the risk factors: higher population densities and higher concentrations of insured values, especially in endangered areas. It therefore remains crucial that insurers and reinsurers identify and diversify natural catastrophe risks.
This publication can be downloaded in English, German, Spanish, French and Italian.
Download "Natural catastrophes and man-made disasters in 2001: man-made losses take on a new dimension"
Download "Natur- und Man-made-Katastrophen 2001: Man-made-Schäden einer neuen Dimension"
Download "Catástrofes de la naturaleza y catástrofes antropógenas en 2001: los siniestros antropógenos cobran una nueva dimensíon"
Download "Catastrophes naturelles et techniques en 2001 : des catastrophes techniques d'une nouvelle ampleur"
Download "Calamità naturali e catastrofi man-made nel 2001: i sinistri man-made assumono nuove dimensioni"
For further questions and copies of Chinese or Japanese versions, please contact sigma@swissre.com.
