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Munich Re: 2011 already the highest-ever loss year on record from natural catastrophes; led by Japan earthquake

An exceptional accumulation of very severe natural catastrophes makes 2011 the highest-ever loss year on record, even after the first half-year, according to Munich Re. Already, the approx. US$265 billion in economic losses up to the end of June easily exceeds the total figure for 2005, previously the costliest year to date (US$220 billion for the year as a whole). Most of the losses were caused by the earthquake in Japan on 11 March.

Altogether, the loss amount was more than five times higher than the first-half average for the past ten years. The insured losses, around US$60 billion, were also nearly five times greater than the average since 2001. First-half losses are generally lower than second-half losses, which are often affected by hurricanes in the North Atlantic and typhoons in the Northwest Pacific. The total number of loss-relevant natural events in the first six months of 2011 was 355, somewhat below the average for the previous ten years (390).

The role of insurance in such a case is to bear these seldom catastrophe losses and, by so doing, assist with the rebuilding effort and the economic recovery of the region concerned. We were not surprised by any of the events when seen as single events, since they were within the range of what our risk models led us to expect. The accumulation of so many severe events of this type in such a short period is unusual, but is also considered in our scenario calculations.

—Munich Re Board member Torsten Jeworrek

Most of the losses were accounted for by the earthquake in Japan on 11 March, which caused an overall economic loss of US$210 billion. The 9.0 magnitude earthquake, the strongest ever registered in Japan, is also the costliest natural catastrophe on record—even more expensive than Hurricane Katrina in 2005, which caused economic losses in the order of US$125 billion. Nevertheless, the currently estimated US$30 billion claims burden for the insurance industry will not attain the level of insured losses caused by Hurricane Katrina.

The Japanese quake was also the biggest catastrophe to occur in the first half of 2011 in human terms. At least 15,500 people lost their lives and thousands are still missing following the earthquake and the subsequent tsunami, which devastated entire cities along the northeast coast of Japan.

The quake on 11 March occurred under the sea to the east of Honshu, the main island, some 350 km northeast of the Tokyo conurbation, and was followed 35 minutes later by a similarly severe (7.9 magnitude) aftershock, which caused even greater losses in the Tokyo area than the main earthquake. Experts had expected a strong quake in Japan for some time, but involving some other location instead.

The severe earthquakes that shook the city of Christchurch, New Zealand, in February and in June (the third time since autumn 2010) are not connected with the Japanese quake. Economic losses from the 6.3 magnitude earthquake on 22 February in particular were very high, amounting to approx. US$20 billion, of which more than US$10 billion was insured. This was due to the fact that the ground motion was amplified by the reflection of seismic waves off an extinct volcano complex situated nearby. There was also widespread ground deformation. Moreover, buildings that had sustained damage in September 2010 were now completely destroyed by the tremors.

Munich Re and climate change
In 2010 prior to the world climate summit, Munich Re drew attention to the number and scale of weather-related natural catastrophes in the first nine months of that year: floods in central Europe, wildfires in Russia, widespread flooding in Pakistan.
The number and scale of weather-related natural catastrophe losses in the first nine months of 2010 was exceptionally high, the company noted, pointing to the strong probability that there is a connection between the large number of weather extremes and climate change.
The reinsurer has built up the world’s most comprehensive natural catastrophe database, which shows a marked increase in the number of weather-related events. For instance, globally, loss-related floods have more than tripled since 1980, and windstorm natural catastrophes more than doubled, with particularly heavy losses from Atlantic hurricanes.
This rise, said Munich Re then, can only be explained by global warming.

In terms of weather-related natural catastrophes, the southern and midwest US states were hit by several exceptionally severe series of tornadoes in April and May. The extreme series of severe weather events can largely be explained by the La Niña climate phenomenon, said Munich Re. As part of this natural climate oscillation, atmospheric disturbances from the northwest recurrently move over the central states of the USA and meet humid warm air in more southerly and easterly regions. Under such conditions, extreme weather events are more probable than in other years. It is therefore no coincidence that the number of tornadoes registered in 2011 up to the end of June—approx. 1,600—is virtually at a record level, i.e. only marginally below the current record year, 2008, which was also affected by La Niña.

Overall the accumulation is nothing unusual in La Niña years. The statistical increase in the number of tornadoes over the course of time is mainly the result of better documentation.

—Peter Höppe, head of Munich Re’s Geo Risks Research

Most of the severe thunderstorm-related hazards are local events, which cause serious damage over a small area but are not comparable to events like severe hurricanes. However, the total loss amount from the tornado series is substantial. In the case of the two most severe series, which occurred at the end of April and in the third week of May, the overall economic losses amounted to approx. US$15 billion, with insured losses an estimated US$10 billion.

Also strongly influenced by the La Niña phenomenon, a number of extreme weather-related natural catastrophes hit the Australian continent in the first half of 2011 as well. Firstly, in Queensland in northeast Australia, where the area north of the city of Brisbane suffered widespread floods following the heaviest rainfall for decades. For the first time in state history, all three major rivers flooded simultaneously.

The first big flood occurred at the end of 2010 but the flooding continued well into January 2011. Brisbane itself was also severely hit although, contrary to what had been feared, the Brisbane River flood waters remained around a metre below the record level of 1974. Altogether, hundreds of thousands of homes and businesses were flooded and large open-pit mines had to be temporarily closed. The overall economic losses of the several events came to approx. US$7 billion, of which US$2.5 billion was insured.

Queensland also suffered its first Force 5 (maximum-strength) storm in nearly 100 years when Cyclone Yasi made landfall on 3 February, bringing wind speeds of over 280 km/h. Although smaller localities were primarily affected by the windstorm, the losses were substantial. The agricultural sector was badly hit, this being a region with large banana plantations. However, the major cities of Cairns and Townsville for the most part escaped significant damage. The overall economic losses amounted to around US$2 billion, of which approximately half was insured.

One factor that stood out was that this year saw the highest sea temperatures ever measured off the coast of Australia, which are contributors to these weather extremes. Although this is linked to La Niña, temperatures were higher than in previous La Niña years.

—Peter Höppe, head of Munich Re’s Geo Risks Research


Henry Gibson

There was massive destruction of energy infrastructure in Japan. Cogeneration is now the least costly way of reducing green house gas release and it can also quickly provide redundant reliable sources of electricity to buildings and homes if so designed. The newest Ecowill from Honda at least partially addresses this issue, and is a way to expand generation rapidly. Such machines can also be combined with the ECOCUTE water heating heat pumps that have become very popular.

It may suprise some people to find out that the combination used for domestic water heating or home heating can be over 200 percent efficient in their use of fuel for heating. Some new Ecocute machines have reached a peformance factor of five kWh of heat delivered for every kWh of electrical input. The newest Ecowill neads less than four units of fuel heat for one unit of electrical output.

The ECOCUTE can be designed to capture nearly all of the waste heat from the Ecowill and add more than an equal amount from the air or ground when the electricity from the Ecowill is not needed otherwise. Ecowill can store heat in water or the ground when it is not used by the Ecocute.

HONDA should build a direct engine powered Ecocute with a 12 volt battery charging output for emergency lights and automatic starting. Ecocute uses a CO2 cycle.

The Capstone microturbines are suited for larger buildings. No new natural gas powered central power stations should be allowed to be built in Japan or anywhere else where cogeneration can save the release of CO2 and supply expanded and redundant power sources.

Larger engine powered cogenerators are also available with inverter outputs for more flexible operation.

It is now the time for a buried direct current electrical grid operating at about 3000 volts initially, but insulated for 10,000 or 30,000 volts for power increases when high voltage converters become cheaper. Even steel can be used in places for the conductor, but other cheap metals such as magnesium can be buried in the ground where weight and strength are not as big a concern. All windmills would be cheaper if designed to connect to such a grid. Any cogenerator of any size can also connect easily to such a grid with modern power electronics. ..HG..


Some new Ecocute machines have reached a peformance factor of five kWh of heat delivered for every kWh of electrical input.

This of course sounds absurd. Actually the Hitachi ECO cute heat pump claims a 30% energy savings over combustion heating. The unit gathers two units of heat from the ambient air, adds one unit of electric yielding 3 units of heat.

These pumps combined with Rossi LANR-type co-generators would produce an even more efficient CHP system.

Henry, there is little need for super HV DC grid lines given the exponential growth in distributed energy systems. It's doubtful that any renewable energy source needing distant transmission will be economical enough to compete against local over-unity systems.

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