The U.S. accounted for a higher proportion of global natural catastrophe losses than usual in 2012 due to a series of severe weather-related catastrophes, according to global reinsurer Munich Re.
For the year, natural catastrophes caused $160 billion in overall losses and $65 billion in insured losses worldwide.
Some 67 percent of overall losses and 90 percent of insured losses were attributable to the U.S. – the respective averages are 32 percent and 57 percent. The year’s highest insured loss was caused by Hurricane Sandy, with an estimated amount of around $25 billion.
“The heavy losses caused by weather-related natural catastrophes in the U.S. showed that greater loss-prevention efforts are needed,” Torsten Jeworrek, a Munich Re board member, said in a statement. “It would certainly be possible to protect conurbations like New York better from the effects of storm surges. Such action would make economic sense and insurers could also reflect the reduced exposure in their pricing.”
Overall, losses were significantly lower in 2012 than in the previous year, when record figures were posted due to the earthquakes in Japan and New Zealand and severe floods in Thailand.
In 2011, overall losses came to $400 billion and insured losses to $119 billion – also a record amount. A long-term comparison shows that 2012 losses were above the ten-year average of $50 billion for insured losses and slightly below the average of $165 billion for overall losses.
Some 9,500 people lost their lives in natural catastrophes in 2012 compared with the ten-year average of 106,000. The relatively small number of fatalities was due to the fact that, in 2012, few severe natural catastrophes occurred in emerging and developing countries, where natural catastrophes tend to have far more devastating consequences in terms of human lives.
Hurricane Sandy
With regard to the 2012 loss statistics, Hurricane Sandy alone accounted for some $50 billion in overall losses, while the insured losses are expected to be around $25 billion. The estimate is still subject to considerable uncertainty because the losses are extremely difficult to assess. Had it not been for this exceptional storm, losses would have been very low in 2012.
Sandy made landfall near Atlantic City on the East Coast, to the south of New York, on October 29. At that point, its maximum wind speeds were around 90 mph but it was an exceptionally wide storm, more than 800 miles in diameter – one-and-a-half times as big as Texas – so that the losses extended over a vast area.
The worst losses were caused by a storm surge on Sandy’s northern side, which extended along several hundred kilometres of coastline from New Jersey to Massachusetts. Sandy’s landfall coincided with a full-moon spring tide, resulting in a storm surge of more than three metres along many parts of the coast.
In Battery Park, at the southern tip of Manhattan, close to Wall Street, the storm surge reached a record 4.3 metres, just one metre of which was attributable to the spring tide. Some of the tunnels linking Manhattan with the mainland were inundated and a number of tunnels on New York’s subway were flooded for the first time in 100 years. There was comparatively little wind damage.
“Sandy’s flood wave hit New York with full force. Its coincidence with the spring tide was a most exceptional circumstance, but such aspects also have to be borne in mind when assessing risks relating to conurbations,” Peter Höppe, Head of Munich Re’s Geo Risks Research, said in a statement.
All in all, the losses revealed a significant degree of vulnerability, especially where infrastructure is concerned. Sandy left a trail of devastation in the Caribbean before it made landfall on the northeast coast of the U.S. Some 80 people lost their lives in Haiti, Jamaica and Cuba and on other Caribbean islands; the overall figure totalled 210. Even in Canada the storm caused insured losses in the order of $100 million.
Drought in the Midwest
The second major loss event of 2012 was the summer-long drought in the U.S. that plagued the Corn Belt in the Midwest and surrounding states, where most of the U.S.’s main agricultural crops, corn and soybean, are grown.
Until November, 2012 had been the U.S.’s warmest year since records began in 1895. Even June and July largely failed to produce the usual rainfall. Only in the Dust Bowl years, from 1934–1936, had yields been decimated by a worse drought. Nearly half of the U.S.’s arable acreage was hit by the 2012 event.
The overall agricultural crop losses in the U.S. in 2012 totalled around $20 billion, of which approximately $15 to 17 billion is covered by the public-private multi-peril crop insurance programme, making it the biggest loss in U.S. agricultural insurance history. In average years, insured losses are around $9 billion.
“These two catastrophes clearly demonstrate the type of events we can expect to contend with more often in the future. It is not possible, of course, to attribute individual events to climate change, each theoretically being possible in isolation,” Hoppe said. “However, numerous studies assume a rise in summer drought periods in North America in the future and an increasing probability of severe cyclones relatively far north along the U.S. East Coast in the long term.”
Other storms
Hoppe predicts that rising sea levels caused by climate change will further increase the risk of storm surge. With no apparent prospect of progress in international climate negotiations, adaptation to such hazards using suitable protective measures is absolutely essential, according to Hoppe.
Tornadoes also caused significant losses in the U.S., many squall lines forming in the spring due to a natural climate cycle. Overall losses from the most severe tornado outbreak (from March 2–4) came to $5 billion, of which 50 percent was insured. Tennessee was particularly badly hit.
There were far fewer severe natural catastrophes in the Asia-Pacific region in 2012, following a year when the major earthquakes in Japan and New Zealand had featured prominently in global loss statistics.
Typhoon Bopha, which struck the Philippines in December, caused over 1,000 deaths, and many people are still unaccounted for. This storm was thU.S. the year’s most devastating natural catastrophe in terms of lives lost, whereas insured losses were minor due to the low insurance density.
Two earthquakes that struck Italy’s Emilia Romagna region in May proved to be Europe’s costliest events. A series of earth tremors was recorded in the region to the east of Modena, which has moderate earthquake exposure, in the period from May to July. The worst earthquakes, which had magnitudes of 5.9 and 5.8, struck on 20 and 29 May. Many of the region’s buildings, including historic monuments, were destroyed, and a large number of businesses located in this rural region’s numeroU.S. small industrial estates were damaged. Overall losses from the two earthquakes totalled some $16 billion and insured losses $1.6 billion.
