Extensive Munich Re study: "Topics Geo – Annual Review: Natural Catastrophes 2004"

2005/02/24

Reinsurance

2004 was marked by dramatic events as a result of earthquakes and tropical cyclones. There were also exceptional natural hazard events in areas that are otherwise seldom affected. The insurance industry sustained record losses. The tsunami event claimed the lives of over 170,000 people, more than 100,000 are still missing, and over a million are homeless.

Munich Re's new study "Topics Geo – Annual Review: Natural Catastrophes 2004" (available for download from today at www.munichre.com) presents a detailed description of the tsunami disaster, which is a further emphatic – and dramatic – demonstration of the threat posed by natural catastrophes. What are the consequences that must be taken in response to this event?

Tsunami catastrophe in South Asia: Education, prevention, insurance solutions
According to official sources, the catastrophe triggered by a magnitude 9.0 earthquake claimed the lives of over 170,000 but, in view of the large numbers of people still missing, there are fears that the figure will exceed 250,000. Hundreds of thousands were injured. The people that suffered most were the local populations along the several thousand kilometres of coast in South Asia and Africa.

Current estimates put the overall economic loss at over US$ 10bn, the insured loss at approx. US$ 1-2bn, and the Munich Re Group's burden at less than €100m. The Topics Geo study:
The consequences that ensue for the field of science, politics, and the insurance industry include the following:

  • Improving knowledge on how tsunamis are generated and the threat they pose to coastal regions
  • Enhancing risk awareness among the population potentially affected and among decision-makers
  • Setting up efficient warning systems, not only for the Indian Ocean
  • Creating communication structures that facilitate a speedy and appropriate response when the alert is given
  • Regulating land use particularly in highly exposed coastal areas
  • Reviewing and analysing the covers in all the lines of insurance involved

Losses caused by natural catastrophes in 2004
Throughout the world, natural catastrophes claimed the lives of more than 180,000 people, i.e. more than twice as many as in 2003. At the same time, the number of natural catastrophes analysed was, at 650, no higher than the average of the last ten years. Economic losses totalled US$ 145bn, including insured losses of US$ 44bn, no less than US$ 40bn of which was generated by the destructive hurricanes in the Caribbean and the United States and the typhoons in Japan.

Exceptional events in areas seldom affected / Accumulation of intense cyclones

In terms of the number of natural catastrophes and the losses they generated, 2004 was again dominated by extreme weather events. In addition to the exceptional accumulation of hurricanes and typhoons, there were also cyclones in parts of the Atlantic where they are not typical:

  • In March, a hurricane formed off the Brazilian coast for the first time since observations began. This part of the South Atlantic had hitherto been classified as hurricane-free because of the low water temperatures there.
  • Another unusual event was Hurricane Alex in August, which on its path northwards gained in intensity far from the Tropics and maintained hurricane force up to a latitude of 42°N (roughly at the latitude of Boston).
  • Florida was hit by four hurricanes within just a few weeks. With losses of US$ 30bn in this region alone, 2004 was the most expensive hurricane season ever for the insurance industry.
  • Japan was hit by ten tropical cyclones, a record number that was unequalled throughout the previous century.

Prof. Peter Höppe, head of Geo Risks Research at Munich Re: "These events are further evidence that a correlation between global warming and the considerable rise in the number of extreme weather events is becoming increasingly plausible. The insurance industry must adjust the scope and price of its insurance covers to the growing risk. This risk of change must be given even more weight in the models it uses to analyse loss potentials from windstorms and severe weather events."

The printed version of Topics Geo is scheduled to appear at the middle of March.

Münchener Rückversicherungs-Gesellschaft
signed Heyd           signed Küppers

Tsunami catastrophe in South Asia: Education, prevention, insurance solutions

According to official sources, the catastrophe triggered by a magnitude 9.0 earthquake claimed the lives of over 170,000 but, in view of the large numbers of people still missing, there are fears that the figure will exceed 250,000. Hundreds of thousands were injured. The people that suffered most were the local populations along the several thousand kilometres of coast in South Asia and Africa.

Current estimates put the overall economic loss at over US$ 10bn, the insured loss at approx. US$ 1-2bn, and the Munich Re Group's burden at less than €100m. The Topics Geo study:
The consequences that ensue for the field of science, politics, and the insurance industry include the following:

  • Improving knowledge on how tsunamis are generated and the threat they pose to coastal regions
  • Enhancing risk awareness among the population potentially affected and among decision-makers
  • Setting up efficient warning systems, not only for the Indian Ocean
  • Creating communication structures that facilitate a speedy and appropriate response when the alert is given
  • Regulating land use particularly in highly exposed coastal areas
  • Reviewing and analysing the covers in all the lines of insurance involved

Losses caused by natural catastrophes in 2004

Throughout the world, natural catastrophes claimed the lives of more than 180,000 people, i.e. more than twice as many as in 2003. At the same time, the number of natural catastrophes analysed was, at 650, no higher than the average of the last ten years. Economic losses totalled US$ 145bn, including insured losses of US$ 44bn, no less than US$ 40bn of which was generated by the destructive hurricanes in the Caribbean and the United States and the typhoons in Japan.

Exceptional events in areas seldom affected / Accumulation of intense cyclones

In terms of the number of natural catastrophes and the losses they generated, 2004 was again dominated by extreme weather events. In addition to the exceptional accumulation of hurricanes and typhoons, there were also cyclones in parts of the Atlantic where they are not typical:

  • In March, a hurricane formed off the Brazilian coast for the first time since observations began. This part of the South Atlantic had hitherto been classified as hurricane-free because of the low water temperatures there.
  • Another unusual event was Hurricane Alex in August, which on its path northwards gained in intensity far from the Tropics and maintained hurricane force up to a latitude of 42°N (roughly at the latitude of Boston).
  • Florida was hit by four hurricanes within just a few weeks. With losses of US$ 30bn in this region alone, 2004 was the most expensive hurricane season ever for the insurance industry.
  • Japan was hit by ten tropical cyclones, a record number that was unequalled throughout the previous century.

Prof. Peter Höppe, head of Geo Risks Research at Munich Re: "These events are further evidence that a correlation between global warming and the considerable rise in the number of extreme weather events is becoming increasingly plausible. The insurance industry must adjust the scope and price of its insurance covers to the growing risk. This risk of change must be given even more weight in the models it uses to analyse loss potentials from windstorms and severe weather events."

The printed version of Topics Geo is scheduled to appear at the middle of March.

Münchener Rückversicherungs-Gesellschaft
signed Heyd           signed Küppers

Disclaimer
This media information 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.

Further Information

For media inquiries please contact:
Florian Wöst
Phone
+49 (89) 38 91-94 01
Peter Höppe
Head of Geo Risks Research/Corporate Climate Centre
Munich Re (until 31.12.2017)
Dr. Anselm Smolka
Phone
+49 (89) 38 91-52 94
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