Insurance giant warns of rising natural disaster risk
Munich Re claims 2008 was third worst year on record for natural disaster related losses, and warns climate change will lead to increased risks in the future
By Danny Bradbury, BusinessGreen, 05 Jan 2009
Reinsurance giant Munich Re is calling for more concerted action on climate change this year after singling out 2008 as the third worst year on record for losses from natural disasters.
Overall losses from natural disasters soared to $200bn (£138bn) from $82bn last year, the company said in a statement last week. Insured losses in 2008 were $45bn, up roughly 50 per cent from last year.
Munich Re spokesman Robert Kinsella said that the company did not adjust premiums based on individual events, but concentrated on longer-term trends. However, the company's findings lean toward viewing the weather effects of climate change as a long-term trend.
The 10 largest natural catastrophes in 2008 accounted for $167.5bn in losses, although just over half of those losses were incurred by a single non-climatic event - the earthquake in China in May.
This might provide ammunition for global warming sceptics, but the firm's figures suggest a longer-term trend of increased natural disasters that are related to global warming.
For example, the trend line for hydrological events has been nosing steadily upwards. In 1980, there were 110 such events globally. In 2007, the rolling average had reached around 350 per year. In particular, storm events have spiked dramatically since 2004. Meanwhile, geophysical events such as earthquakes and volcanic eruptions have increased on average from around 60 to 100 events per year since 1980.
Munich Re first raised fears about the adverse effects of climate change in 1973.
"The naysayers deny it, but we've been in the business a long time, and we're convinced that climate change is having an effect. We're likely to see more frequent, severe storms in the future," Kinsella said, adding that those living in coastal areas are likely to be at the greatest risk.
Last year's losses still failed to beat those in 2005, which at $232bn was the single most expensive year to date. That was a record year for hurricanes and tropical storms, and also saw Hurricane Katrina, which was the most expensive hurricane on record with $125bn in direct losses, the company said. 1995 - the year of the Kobe earthquake in Japan - was the second most expensive.
Hurricane and tropical storm activity last year was also well above average, according to Colorado University's Tropical Meteorology Project. It has also predicted above normal activity for 2009.
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