NatCatSERVICE information

Increasing intensity and costs of natural catastrophes — Is this a long-term trend?

2005 broke all negative records. Natural catastrophes have never been so expensive, either for the world’s economies or for the insurance industry. It was also one of the deadliest years of recent decades.

Over the past year we have continued our research into the possibility of identifying natural hazard trends with even greater accuracy and certainty. To this end, the data stored in Munich Re’s natural catastrophe database, NatCatSERVICE®, was prepared to make it more amenable to systematic analysis. We are pleased to publish the results of our work for the first time in this edition of Topics Geo. This NatCatSERVICE® information examines whether there is a discernible trend towards larger natural catastrophes, where in the world such a trend may be evident and how it may manifest itself.

Data sources, data preparation, classification

The whole process of evaluating macroeconomic losses is subject to significant uncertainty and fluctuation, as we discussed in detail in topics — Annual Review: Natural Catastrophes 2000.

We used the Munich Re natural catastrophe categories as a basis for our investigation of possible trends (Graphic: Natural catastrophes — Breakdown into seven catastrophe categories). This seven-level scale — from 0, natural event, to 6, great catastrophe — makes it possible to assign each loss event to a particular category, even if the exact extent of the overall losses are not known or cannot be determined.

Our analysis examined 16,000 natural catastrophes in the period between 1980 and 2005. Only about a quarter of all events were backed up by reliable official figures concerning the economic losses involved. Since the mid-1990s, however, there has been a distinct improvement in the reporting of overall losses (Graphic: Natural catastrophes of economic losses).

Munich Re’s experts estimated the losses from the remaining 12,000 events on the basis of claims notifications and global comparisons with similar events, considering in each case the affected national economy.

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