Munich Re Catalogs Natural Catastrophe Events in 2007; Less Extreme, But Greater in Number
27 December 2007
|Natural catastrophes 2007. Click to enlarge.|
The global insurance industry had to cope with far higher natural catastrophe losses in 2007 than in 2006, with its unusually low loss figures, according to the preliminary annual assessment by Munich Re, a global reinsurance firm.
Despite the general absence of extreme events in 2007, overall economic losses reached US$75 billion by the end of December—an increase of 50% over 2006 (US$ 50 billion). However, the loss figures were well short of 2005’s record US$ 220 billion. At just under US$ 30 billion, insured losses were almost double those of 2006 (US$ 15 billion). The number of natural catastrophes recorded in 2007 was 950 (compared with 850 in 2006), the highest figure since 1974, when Munich Re began keeping systematic records in its NatCatService database.
The figures confirm our expectations and endorse our insistence that risks be consistently written at adequate prices, despite years with comparatively low losses as in 2006. The trend in respect of weather extremes shows that climate change is already taking effect and that more such extremes are to be expected in the future. We should not be misled by the absence of megacatastrophes in 2007.—Dr. Torsten Jeworrek, Board member
The worst human catastrophes of 2007 occurred in developing and emerging countries. Storms, floods and landslides in various parts of Asia caused more than 11,000 deaths, around 3,300 attributable to Cyclone Sidr alone, which struck Bangladesh in November.
The most severe events in terms of insured losses occurred in Europe. The insurance industry’s costliest natural catastrophe was Winter Storm Kyrill, the climax of an above-average winter storm season, which developed on 17 January from a low-pressure system over the mid-Atlantic. With wind speeds far exceeding 100 km/h – and peak gusts of over 200 km/h – it wrought havoc across Europe as far as Poland, the Czech Republic and Austria on 18 and 19 January.
Kyrill caused overall economic losses of some US$10 billion, with insured losses of around US$5.8 billion. It was the second most expensive such event in Europe after Winter Storm Lothar (December 1999), which had higher wind speeds but at the same time involved a much more limited geographical area. A noticeable feature of Kyrill was that widespread areas of Europe experienced sustained high wind speeds.
Among the countries worst hit was Germany, with more than half the insured losses. Over 1.5 million individual losses were reported&Mdash;many relatively small in scale, such as roof damage. The east of Germany suffered particularly heavy losses in the area where hailstorms and tornadoes formed along the cold front associated with the storm.
The insurance industry faced an even greater aggregate loss—albeit from consecutive events—as a result of two floods in England during the summer. From June to August, precipitation levels in England and Wales were the highest since records began in 1914. Central and northeast England experienced twice the normal rainfall. Losses from the events in June were comparable to those sustained three weeks later in July, some counties being affected on both occasions. Overall economic losses were around US$4 billion for each event, of which US$3 billion were insured in each case.
These events cannot, of course, be attributed solely to climate change, but they are in line with the pattern that we can expect in the long term: severe storms, more heavy rainfall and a greater tendency towards flooding, including in Germany.—Prof. Peter Höppe, Head of Munich Re’s Geo Risks Research Department
In view of the steadily rising losses, Munich Re has, for some considerable time, been calling for firm action to address the causes of climate change and adapt to changes that cannot be avoided.
The year 2007 also numbers among the warmest years since routine measurements began. According to data published by the Hadley Centre in the UK for the period up to December, 2007 was the seventh warmest year on record worldwide and the second warmest in the northern hemisphere. This means that the 11 warmest years worldwide have been recorded during the last 13 years.
Losses due to the North Atlantic hurricane season were relatively low, although the general situation had initially indicated the likelihood of a more severe course of events. Despite 15 named storms in all, in keeping with the average for the current warm phase that goes back to 1995, the number of hurricane-force storms (five) was below the average (eight). This is due to lower-than-expected water surface temperatures in the tropical Atlantic and the counteracting effects of air-current conditions in the upper layers of the atmosphere.
The relatively low losses can be explained by the tracks of the hurricanes, no major hurricanes reaching the US mainland, as in 2006. The most severe, Hurricane Dean, made landfall as a Category 5 hurricane on Mexico’s Yucatan peninsula. With wind speeds of up to 270 km/h, it was comparable to Hurricanes Rita and Wilma in 2005. Dean caused severe damage in Yucatan and on the islands of the Caribbean, although the main tourist areas were not as seriously affected.
All the facts indicate that losses caused by weather-related natural catastrophes will continue to rise. As a leading reinsurer, we are ready to deal with this. Ultimately, however, it is society as a whole which bears the cost – in the form of higher insurance premiums or infrastructure repairs financed by taxes. That is why speedy international action is needed. In addition, climate protection can bring huge economic opportunities, thanks to new technologies and increased energy efficiency. This will primarily benefit companies that are swift to act. As we have proved by years of research and new insurance products for renewable energy plants, for instance, we are determined to be among them.—Torsten Jeworrek
In terms of overall economic losses, the most expensive event was the earthquake that struck the Niigata prefecture in Japan on 16 July. Insured losses from the medium-strength (magnitude 6.6) quake were not significant, but economic losses were in the order of US$12.5 billion. The world’s largest nuclear power plant, close to the city of Kashiwazaki, was damaged, small quantities of radioactive material escaping into the environment. The earthquake also affected a major automotive component supplier, resulting in a production shortfall of 120,000 vehicles for car manufacturers.
Munich Re assigns natural catastrophes to one of six categories for assessment purposes. The annual list includes all events with more than ten fatalities and/or losses running into millions.
Why is this a story on greenCARcongress??
Posted by: Mark A | 27 December 2007 at 09:00 AM
"... climate protection can bring huge economic opportunities, thanks to new technologies and increased energy efficiency."
Posted by: Engineer-Poet | 27 December 2007 at 10:47 AM
In México, people who live near the states of Texas an New Mexico should be more aware of tornadoes.
In April 2007, a strong tornado -maybe F3 at least- caused a lot of damage in Piedras Negras, Coahuila !
In the last 4 years, I have seen 3 tornadoes near a town which is 50 miles from México city.
One of these tornadoes lasted more than 35 minutes.
Posted by: Jorge | 27 December 2007 at 11:45 AM
This story is on GCC, because NG may be a big part of our future and it has risks. LNG is very risky and it is the direction that the industry is heading.
I always appreciate your irony... I guess in every cloud, there is an opportunistic "silver lining". (just kidding :)
Posted by: sjc | 27 December 2007 at 02:37 PM
Correction...this has to do with natural disasters. I would assume that it is here because burning fossil fuels causes global warming and climate change. Severe climate events cause natural disasters due to weather related events. So, the greener our cars the less climate change and the lower risk of natural disasters caused by severe weather related events.
Posted by: sjc | 28 December 2007 at 07:18 AM