Insurance Industry Facing $35 Billion Plus Bill for 2004
Buenos Aires, 15 December - 2004 is set to go down in the history books as the most expensive year for the insurance industry world-wide as a result of hurricanes, typhoons and other weather related natural disasters.
Figures released today at the international climate change conference taking place in Buenos Aires, Argentina, show that for the first 10 months of this year natural disasters cost the insurance industry just over $ 35 billion, up from $ 16 billion in 2003.
The United States, at over $ 26 billion suffered the highest insured losses according to the preliminary figures compiled by Munich Re, one of the world’s biggest re-insurance companies.
The global insured losses are likely to be even higher when the months of November and December are brought into the equation.
Economic losses, the majority of which were not insured, will also have cost the planet and its people dear.
Preliminary figures for the months January to October estimate that these losses were also among the highest on record totaling, so far, about $ 90 billion up from over $ 65 billion in 2003.
Hardest hit have been many small, developing countries with the islands of Grenada and Grand Cayman in the Caribbean underlining the impact on fragile economies.
Hurricane Ivan, which struck Grenada in September, killed 28 people and is estimated to cost one billion US dollars in damaged homes, buildings and agricultural losses.
It may take several years for the key crops of nutmeg and cocoa to recover leaving thousands of workers facing unemployment until the production is restored.
The insurance industry is worried that new, climate-related risks, may be emerging. Hurricane Catarina, which hit Brazil earlier this year, developed in the Southern Atlantic where normally sea surface temperatures are too low to trigger tropical cyclones.
Klaus Toepfer, Executive Director of the United Nations Environment Programme (UNEP) which today released the estimates at the Tenth Session of the Conference of the Parties to the UN Framework Convention on Climate Change, said: “Climate change is already happening with rapid melting of the Arctic and glaciers world wide. Climate scientists anticipate an increase and intensity of extreme weather events and this is what the insurance industry is experiencing resulting in year on year losses.”
“In many developing countries the impacts of high winds and torrential rains are aggravated by a variety of factors ranging from the clearing for forests making hilly slopes more vulnerable to land slips and slides to a lack of enforcement of building codes. Reducing vulnerability and helping poorer nations cope with the ravages of climate change is vital. Some experts estimate that for every one dollar invested in disaster preparedness, you will save six dollars in reconstruction costs,” he said.
“However, it cannot be an alibi for inaction on emission cut backs. In the end, many smaller countries like low-lying small island developing states and countries like Bangladesh, can only adapt for so long before they are eventually over come by the impacts of storm surges and rising sea levels,” said Mr Toepfer.
The findings on the preliminary costs of weather-related natural disasters have come from Munich Re, one of the world’s biggest re-insurance companies and a member of the UNEP Finance Initiative.
Thomas Loster, a senior executive and climate expert with Munich Re which is part of UNEP’s Finance Initiatives, said: “As in 2002 and 2003, the overall balance of natural catastrophes is again clearly dominated by weather-related disasters many of them exceptional and extreme. Indeed 98 per cent of all losses for 2004 and about 100 per cent of insured losses were weather driven. We need to stop this dangerous experiment human-kind is conducting on the Earth’s atmosphere ”.
“According to our latest findings, economic losses from January to October are in the order of $ 90 billion. The average value of the last ten years has been $ 70 billion. Insured losses, driven by weather or climate-related disasters, will amount to more than $ 30 billion, making 2004 the costliest natural catastrophe year ever for the insurance industry world-wide. There are indications that the figures will further increase, “ he said.
“I would urge delegates and governments here in Buenos Aires to make a strong commitment to a post Kyoto agenda otherwise the industry’s appetite to finance and insure projects under the instruments of the Kyoto Protocol, such as the Clean Development Mechanism, will be blunted,” said Mr Loster.
A Few Key Disasters in 2004
Hurricane Catarina hit southern Brazil in March causing an estimated US $ 350 million in economic losses. This was the first time since world-wide observations began that a hurricane developed in the Southern Atlantic where sea surface temperatures are usually too low for tropical cyclones.
Hurricane Jeanne released torrential rain on Hispaniola, causing severe flooding and killing more than 2,000 people in Haiti and the Dominican Republic.
A record number of ten typhoons made landfall in Japan, the most destructive of which were Chaba, Songda and Tokage, one of the strongest typhoons ever. Altogether they caused economic losses of US $ 10 billion and insured losses of more than US$ 6 billion.
Hurricane Ivan was one of the most destructive and strongest storms ever, maintaining a strength of category force four to five on the Saffir Simpson for more than five days. Apart from the Caribbean islands, the storm also caused serious damage to offshore platforms in the Gulf of Mexico. Economic losses are estimated as up to $ 3 billion.
Dr Kenrick Leslie, Director of the Caribbean Community Climate Change Centre hosted by the Government of Belize and supported by UNEP, said Ivan was as a “unique event never before seen in the Caribbean”.
“Grenada normally escapes such events. But here was a hurricane that formed south and east of the Antilles. It is believed to be the first in recorded history of a hurricane forming so far south and east of the Antilles,” he said.
Dr Leslie, who established the national meteorological service in Belize and whose organization covers 15 countries in the wider Caribbean, said the impact on the economy of Grenada was “both worrying and distressing”.
The estimated damage of one billion dollars was twice the islands’ gross domestic product.
Close to 30,000 houses or nearly 90 per cent were damaged of which 10,000 or a nearly a third were beyond repair.
Schools and centres of learning were hit amounting to $ 90 million in damages with over 30,000 students affected.
Damage to hospitals and public health care centres is estimated at over $ 4 million and over 38,000 people have been left unemployed in the key agricultural sectors of nutmeg and cocoa.
Notes to Editors
The full report by Munich Re, which will be published in early 2005. www.munichre.com
Details of the Caribbean Community Climate Change Centre can be found at www.caribbeanclimate.org
For More Information Please Contact Eric Falt, UNEP Spokesperson and Director of the Division of Communications and Public Information: Tel.: 254-(0)20-623292, Mobile: +254-(0)733-682656, E-mail: email@example.com,
In Buenos Aires Nick Nuttall, UNEP Head of Media, on Mobile: +54 9 11 4979 2097 or E-mail: firstname.lastname@example.org
UNEP News Release 2004/52