Weather-related catastrophes on the rise in Asia Pacific
The floods in Thailand – the highest-ever economic loss for the country from a natural disaster – are one of the latest examples of the high exposure to weather-related natural catastrophes in Asia Pacific. Munich Re’s extensive natural catastrophe database (NatCatSERVICE) shows clearly that weather-related catastrophes have more than tripled over the last 30 years. In China alone, weather-related disasters have more than quadrupled since 1980.
Munich. With growth in population, continued urbanisation in exposed areas and increasing wealth, we also expect economic losses to rise further. Meanwhile, insurance density remains very low in many countries of the region. On average, only 6% of natural catastrophe losses were insured over the last 30 years.
While the frequencies and magnitudes of geophysical disasters have not increased, Asia Pacific continues to be highly exposed to earthquakes.
Year to date, the region has borne the brunt of natural catastrophe losses. 80% of all economic losses from natural disasters in the first nine months occurred in Asia Pacific. With the earthquakes in New Zealand and Japan, the floods and cyclone in Australia, and flooding across many countries in Central and South East Asia, the economic losses in the region came to US$ 259bn in the first nine months of 2011, around US$ 52bn of which was insured.
Worldwide economic losses from natural disasters amount to US$ 310bn for the first nine months alone, making it the costliest year ever. Of these losses, around US$ 80bn will be covered by the insurance industry. The previous record year for economic losses was 2005, with hurricanes Katrina, Rita and Wilma.
Over the last 30 years, Asia Pacific has experienced more than 50% of all fatalities from natural catastrophes, almost 40% of all economic losses but less than 9% of the insured losses.
This shows the urgent need for wider natural catastrophe insurance coverage. This can be met through a variety of measures, from traditional insurance and reinsurance, to public-private partnerships or pooling of natural catastrophe risks nationwide.
“Such public-private partnership solutions can provide durable economic stability to societies and government budgets by offering significant financial relief when disaster hits, immediate liquidity to governments and citizens, assistance in balancing government budgets and help with risk prevention and post-disaster management”, commented Ludger Arnoldussen, member of Munich Re’s Board of Management.
Munich Re has the expertise and experience, and is discussing natural catastrophe schemes with governments all over Asia. The support can be twofold: on the one hand, driving the discussion in greatly exposed economies to structure country-wide solutions; on the other, finding solutions for governmental infrastructure assets such as roads and bridges.
This press release contains forward-looking statements that are based on current assumptions and forecasts of the management of Munich Re. Known and unknown risks, uncertainties and other factors could lead to material differences between the forward-looking statements given here and the actual development, in particular the results, financial situation and performance of our Company. The Company assumes no liability to update these forward-looking statements or to conform them to future events or developments.