Selected major losses since 2000
The attack on the Center in New York on 11 September 2001 led to a fundamental change in the perception of terrorist attacks. With thousands of people killed and the symbolic collapse of the two towers at the heart of the Western world – it was an entirely new dimension of threat. This was also the case for the insurance industry, whose risk models had never covered an event of this kind before. 9/11 remains one of the costliest loss complexes ever. Virtually all lines of insurance were affected, with insured losses totalling US$ 40bn. It took more than ten years to process the claims, even though the exceptional political situation in the USA meant that many liability claims were settled through government programmes. In particular, compensation for surviving dependants came almost exclusively from the Victim Compensation Fund administered by Ken Feinberg.
Ina Ebert, Leading Expert, Global Clients/North America
On 21 September 2001, at 10.17 a.m. precisely, several explosions occurred in an ammonium nitrate storage facility not far from the centre of Toulouse. The blast wave caused massive damage to the facility and a total of 31 people died at the explosion site. Hundreds of passers-by and residents were injured by shards of flying glass. It is likely that material with an extremely high concentration of ammonium nitrate became mixed with other chemicals (such as engine oil from leaking transport vehicles) and was ignited by an unidentified heat source. The company’s loss, which ran into the hundreds of millions, was far exceeded by the third-party loss. The treatment costs for the 2,500 people directly injured and for 14,000 people indirectly injured are also likely to have been higher than the property damage itself.
Robert Schmid, Senior Underwriter, Special & Financial Risks
The “Edificio Windsor Fire”, Madrid 2005: The fire started on the 21st floor, spreading quickly throughout the entire building. After approximately 18 hours of firefighting, the 32-storey building was totally destroyed. Ironically, weak links in the building’s fire protection were being rectified in a refurbishment project at the time of the fire. Confusion regarding the firefighting strategy and the unsuccessful efforts of the fire brigade were the reasons for the catastrophic outcome. In insurance terms, another issue was the wide safety area set up around the building – an impediment to commercial activities, which increased the claims costs. It was the largest fire that Spain had ever witnessed and the first involving a skyscraper: a tragic reminder of the importance of building with fire-resistant materials. Despite the massive loss, there were at least two upsides: the demolition process was exemplary, concluded in less than six months, and collaboration between Munich Re and its clients was highly effective.
Andrés Ruiz Feger, Senior Lawyer Claims, Madrid
In 2005, New Orleans was hit by Hurricane Katrina, one of the most devastating tropical cyclones ever and a humanitarian catastrophe that claimed the lives of more than a thousand of the city’s inhabitants. Katrina made landfall near Miami on 25 August and in the days that followed moved towards the eastern portion of the Gulf of Mexico. Owing to the exceptionally warm ocean temperatures, Katrina quickly intensified to a category 5 hurricane with peak gusts of up to 340 km/h. Continuing at this strength, it then crossed over the oil production areas off the coast of Louisiana and Mississippi. Katrina was one of the most expensive cases ever for the insurance industry, with overall losses of US$ 125bn and an insured loss of US$ 60.5bn.
Klaus Wenselowski, Head of Property Claims Management
On 11 December 2005, what was possibly the largest peacetime explosion ever to occur in Europe (2.4 on the Richter scale) took place at the Buncefield oil depot in England. Although the fire was contained mainly on site and there was no loss of life, the explosion caused tremendous damage. Overall losses came to approximately £1bn. On the property insurance side, it was mainly repair costs and consequential business interruption losses that had to be indemnified. Casualtywise, the obvious subrogation targets were the joint venture operators of the depot. On 20 March 2009, the High Court finally confirmed liability for claims of around £700m. In total 3,545 claims had to be settled.
Rainer Hanselmann, Head of Casualty Claims Management (GC/NA & APAC)
Deepwater Horizon 2010
On 20 April 2010, an explosion on the “Deepwater Horizon” offshore oil rig in the Gulf of Mexico caused 11 fatalities, enormous property damage and a major environmental disaster. The oil leak from the rig lasted 87 days, spilling over 780 million litres of oil into the sea. According to official figures, the spill contaminated over 1,000 kilometres of the Gulf coastline. This catastrophe became one of the most expensive losses ever in the offshore energy sector.
Klaus Wenselowski, Head of Property Claims Management
On 11 March 2011, the largest earthquake ever recorded in Japan shook the northeast of the country. The Mw 9.0 earthquake was the world’s fourth-strongest in the last 100 years and triggered a 10-metre high tsunami, which led to the nuclear disaster at Fukushima. In contrast to the almost complete destruction in tsunami-affected areas, losses in other areas hit by the earthquake were moderate. Although Tokyo’s skyscrapers swayed strongly for several minutes, there was no significant damage there. The earthquake claimed more than 15,800 lives, almost 6,000 were injured and over 3,400 remain unaccounted for. While the economic loss totalled more than US$ 200bn, insured losses were in the region of US$ 35bn to US$ 40bn.
Andreas Langer, Manager Claims
Costa Concordia 2012
When the Costa Concordia ran aground off the island of Giglio on 13 January 2012, it was set to become the biggest ever loss in the maritime insurance market. The reason for the accident was gross negligence on the part of the captain, who was sailing too close to the island, at too great a speed, and without proper maps. With an overall loss of around US$ 2bn, the claim is unparalleled in the history of maritime insurance. Salvage and dismantling costs alone, which were met under the liability cover, amount to US$ 1.2bn. The reinsurance market will eventually shoulder more than 90% of the overall loss.
Olaf Köberl, Senior Manager Claims
Fort McMurray 2016
On 1 May 2016, a wildfire started southwest of Fort McMurray, Alberta, sweeping through the community and forcing the largest wildfire evacuation in the Canadian province’s history. It destroyed more than 2,400 buildings and spread across northern Alberta, threatening the Athabasca oil-sands operations before making its way towards the neighbouring province of Saskatchewan. This natural catastrophe is one of the costliest to have ever hit Canada, with insured losses of approximately Can$ 4bn.
Joachim Pawellek, Manager Claims