Great weather-related natural catastrophes of the past decades
A comparison of the figures of past decades (cf. table 2) reveals the incredibly dramatic situation. In the past ten years, there were almost three times as many occurrences of great weather-related natural catastrophes as in the 1960s.
Real economic losses increased fivefold, insured losses no less than tenfold. This means on average that, if we extrapolate the figures to current values, the insurance industry now has to cope every year with the same burden of claims from great weather-related natural catastrophes as it did in the entire decade of the 1960s. This increase is largely due to a series of socio-economic factors (cf. following table 1), including the growing concentration of people and values in cities.
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Table 1: Natural catastrophes are increasing in size and frequency
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The most important reasons:
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| Population growth |
| Rising standard of living |
| Concentration of population and values in conurbations |
| Settlement and industrialisation of heavily exposed regions |
| Vulnerability of modern societies and technologies |
| Increasing insurance penetration |
| Changes in environmental conditions |
The cities themselves are becoming more vulnerable and are often located in highly exposed regions. Also, as events have repeatedly shown, the susceptibility of buildings and infrastructure is increasing rather than decreasing — in spite of modern building codes and technological development. This inevitably affects highly developed industrial countries most of all, as a number of catastrophes in the United States, Europe, and Japan in recent years have strikingly confirmed.
However, these changes in exposure and vulnerability do not sufficiently account for the increase in natural catastrophe losses in its entirety, as Munich Re demonstrated in its millennium report on the development of natural catastrophes in the last thousand years. On the contrary, there is mounting evidence that the frequency and intensity of weather-related natural catastrophes are increasingly being influenced by global environmental changes, and above all by climate change.
The Intergovernmental Panel on Climate Change, for example, in its third status report (IPCC 2001) attaches great importance to the connection between global warming and the frequency of atmospheric extreme events. It does so because this is exactly the area in which the effects of climate change are acutely evident.
Just a relatively small shift in the mean values — with an unchanging shape in the probability distribution, e.g. a normal distribution in the form of the Gaussian bell curve — can lead to a dramatic increase in the exceedance probabilities of critical threshold values. This was first revealed by the analysis of summer temperatures in central England (Fig. 2), which is the most convincing analysis of its kind to date.The study examined the effects of a moderate 1.6°C increase in mean values by the middle of this century.
Insurance related consequences
From the insurance point of view, its results may almost be considered a catastrophe scenario. The exceptionally warm and dry summer of 1995 led to large areas of the clay soil commonly found in England drying up and shrinking.
As a consequence, innumerable buildings suffered subsidence damage. The UK insurance market had to pay claims amounting to several hundred million pounds; the total for the 1990s, which were unusually warm as a whole, came to more than £1bn. Even an apparently harmless shift in seasonal mean temperatures can therefore have colossal economic repercussions. The hot summer of 2003 in western and central Europe provided striking proof of this.
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