Munich Re, the world’s biggest reinsurer, says that reinsurers should take into account the fact that climate change has boosted natural catastrophes when they price weather disaster insurance. Re-insurance companies such as Munich Re and others like Swiss Re help the insurance industry to cover the cost of major damage claims like hurricanes, earthquakes and floods.
In 2011: The company said their study showed the number of weather-related loss events in North America nearly quintupled in the past three decades, compared with an increase factor of four in Asia, 2.5 in Africa, two in Europe and 1.5 in South America.
Munich Re faced its second-costliest natural catastrophe year on record in 2011 after multiple natural disasters generated a claims bill of $116 billion.
Natural disasters in 2011 exerted the costliest toll in history — a whopping $380 billion worth of losses from earthquakes, floods, tornadoes, hurricanes, wildfires, tsunamis and more. Only a third of those costs were covered by insurance. That figure ignores completely any expenses associated with sickness or injuries triggered by the disasters. And except for quake-related events, climate change appears to have played a role in the growing cost of disasters, insurers said.
Munich Re said reinsurers should prepare to face more weather-disaster claims in the future and seek to mitigate the losses by raising premiums. The company also said that tighter building regulations and better flood management needs to be addressed.
Centre for Research on the Epidemiology of Disasters (CRED) has along history of standardized data compilation, validation and analysis. It provides free and open access to its data through its website. One of CRED’s core data products is the EM-DAT the International Disaster Database.
A few Munich Re Quotes:
“Munich Re describes the underlying factors of changing risk, including climate variables and climate change.”
“Natural insurance will therefore remain a challenge, with Climate Change bringing further uncertainty.”
“A strong upward trend in insured losses caused by severe thunderstorms has been observed in recent years. This hazard will most likely increase further as the climate changes.”
“Weather perils in Canada comprise particularly ﬂoods, wildﬁres, severe winds and winter storms. Urban growth, aging infrastructure and climate change are expected to alter the risk situation.”
“In the long term, anthropogenic climate change is believed to be a signiﬁcant loss driver, though it inﬂuences various perils in different ways. For instance, it particularly affects formation of heatwaves, droughts, thunderstorms and – in the long run – tropical cyclone intensity.”
“Increasing value concentrations, new growth regions, ever greater cumulative risks and above all the effects of climate change have made the analysis of natural hazards a significant element of modern risk management.”
“Eastern Asia has been hard hit by weather-related loss events in the past three decades. Their number has increased by more than a factor of four.”
““The frequency of flood events in Germany and central Europe has increased by a factor of two since 1980.”
“In a number of regions, weather-related natural catastrophes have grown more frequent and more severe in recent years. We expect this trend to play an increasingly prominent part in the changing risk landscape in the future. If the climate models are right, numerous regions will experience higher losses than in the past. Changes in many atmospheric processes will have a major impact on material assets unless appropriate adaptation measures are introduced. Even more importantly, such changes will affect the lives and well-being of millions of people.”
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