Jamaica Gleaner
Published: Friday | January 2, 2009
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Caribbean hurricanes and other disasters dump losses on insurers

A house that sits close to a waterway in Broadgate, St Mary was torn apart by Hurricane Gustav. The losses from hurricanes Gustave and Ike amounted to twice the insured loss. - File

Insurers' losses from natural disasters rose by about 50 per cent, with Caribbean hurricanes Ike and Gustav powering the increase and climate change increasingly a factor, a leading reinsurer said Monday.

Munich Re AG said in an annual review that insured losses came in at US$45 billion this year, up from nearly US$30 billion in 2007.

It said total economic losses, including losses not covered by insurance, leapt to some US$200 billion from last year's US$82 billion.

That increase was due in part to the devastating earthquake which hit China's Sichuan province in May.

Munich Re said the quake caused overall losses of US$85 billion - by far the year's biggest - but insured losses of only US$300 million.

The year was marked by high losses from weather-related natural disasters, continuing a long-term trend.

Weather extremes

"Climate change has already started and is very probably contributing to increasingly frequent weather extremes and ensuing natural catastrophes," board member Torsten Jeworrek said in a statement.

"These, in turn, generate greater and greater losses because the concentration of values in exposed areas, like regions on the coast, is also increasing further throughout the world."

The company noted that six named storms - Dolly, Edouard, Fay, Gustav, Hanna and Ike - reached the US coast this year after two years in which the American mainland was largely spared.

The year's most expensive event for insurers was Hurricane Ike, which hit the Caribbean and the southern United States in September, causing insured losses of US$15 billion. In second place was Gustav, which hit shortly before and caused losses of US$5 billion.

In both cases, the overall losses were about twice the insured loss.

Munich Re said an unusually severe snow- and ice-laden cold spell in China in January and February, which badly hit roads, railways and electricity supplies, cost insurers $1.6 billion - well short of the overall economic losses, which it estimated at $21.1 billion.

A winter storm that hit central Europe in early March cost insurers some US$1.5 billion.

Munich Re said an unusually severe US tornado season, with a total of 1,700 tornadoes, also proved costly. A series of tornadoes that killed 12 people in late May generated insured losses of more than $1.3 billion.

Deadliest disaster

The year's deadliest disaster was Cyclone Nargis, which devastated coastal areas in Myanmar in early May, killing nearly 85,000 people.

Munich Re put overall economic losses at US$4 billion, but gave no figure for insured losses in the isolated country.

While they rose sharply for the second consecutive year, this year's insured losses were still well short of the $99 billion Munich Re recorded in 2005 - when losses were swollen by claims from Hurricane Katrina in New Orleans.

The company said that year also saw a record overall economic loss of some US$232 billion, adjusted for inflation.

Munich Re, a reinsurer, offers backup policies to companies writing primary insurance policies. Reinsurance helps spread risk so that the system can handle large losses from natural disasters.

- AP

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