Extreme Weather Knocks Global Insurers

Munich Re, the world's biggest reinsurer, says insurance industry damage claims stemming from natural disasters reached a record $105bn last year

INSURANCE industry damage claims stemming from natural disasters such as the earthquakes in Japan and New Zealand reached a record $105bn last year, Munich Re, the world's biggest reinsurer, said [on Wednesday 4th January 2012].

Despite the heavy payouts, many observers said the claims were not big enough on their own to provide a broad boost to reinsurers' pricing strength relative to their insurance company clients, because reinsurers still had plenty of excess capital.

The cost to insurers from the earthquake and tsunami in Japan in March, which caused nearly 16000 deaths, was estimated at $35bn-$40bn, the company said in a review of last year's natural disasters. An earthquake in New Zealand in February added $13bn to insurers' claims payouts for the year, Munich Re said.

The earthquakes together made up about half of last year's total insured losses from natural catastrophes, which topped the previous record of $101bn set in 2005, when Hurricane Katrina devastated New Orleans.

"Normally, it is the weather-related natural catastrophes that are the dominant loss drivers," Munich Re said.

Total economic losses last year, including those not covered by insurance, were $380bn, the reinsurer said, thus also topping the record of $220bn set in 2005.

Source: Business Day – 5 January 2012