Only four months in and it's been a bad year for disasters. It's only April and we have so far had earthqakes, tsunami and nuclear meltdowns in Japan, and bad floods around the world including Australia. It's just the beginning.
The spate of natural disasters is wreaking havoc for the global insurance industry. According to the latest sigma report from insurance giant Swiss Re worldwide economic losses from natural catastrophes and man-made disasters totaled $US218 billion in 2010. That's more than three times the 2009 figure of $US68 billion. The cost to the global insurance industry was more than $US43 billion, an increase of more than 60% over the previous year.
And then there is the human cost. Approximately 304 000 people died in these events, the highest number since 1976. In 2010, severe catastrophes claimed significantly more lives than the previous year. Around 304 000 were killed. Compare that to the 15 000 in 2009. The deadliest event in 2010 was the Haiti earthquake which claimed more than 222 000 lives. Add to that the summer heatwave in Russia and the summer floods in China and Pakistan.
Remarkably, earthquake losses accounted for almost one third of all catastrophe losses in 2010.
What's causing the uptick in disasters? Much of it is because of population growth and more people living in cities. Climate change would be contributing to the floods and heat waves. Governments need to improve prevention and post disaster management. In the meantime, we can expect the insurance industry to have massive losses. If you have shares in the insurance sector, get out of it now.
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