2011 is the second costliest year in insured history

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2011 is the second costliest year in insured history

Total economical losses are US$350 billion.

December 15, 2011

In 2011, total economic losses to society (both insured and uninsured) due to disasters reached an estimated US$350 billion, compared to US$226 billion in 2010, according to preliminary estimates from Swiss Re’s sigma team. The earthquake in Japan accounts for most of this year’s economic losses. More than 30,000 people lost their lives due to catastrophes in the first eleven months of the year, most of them in Japan.

“2011 is going down as another year of very tragic and costly earthquakes,” said Kurt Karl, Swiss Re’s chief economist. “Unfortunately earthquake insurance coverage is still quite low, even in some industrialized countries with high seismic risk, like Japan. So on top of people losing their loved ones, societies are faced with enormous financial losses that have to be borne by either corporations, relief organizations or governments and, ultimately, taxpayers.”

With approximately US$108 billion in insured catastrophe losses, 2011 ranks as nearly the most expensive year for the insurance industry according to sigma records, second only to 2005 (US$123 billion). Moderate hurricane losses have kept costs lower than in 2005, the year when hurricanes Katrina, Wilma and Rita alone caused claims of over US$100 billion.

If Japan had been as well insured as other countries with high seismic risk, such as New Zealand, the overall industry tally would have been much higher, stated Swiss Re. Even so, in terms of catastrophe claims, 2011 ranks as the second costliest year in history for the insurance industry. Additional claims from the ongoing massive floods in Thailand or from winter storms which may yet hit Europe have the potential to bring figures for the full year even closer to the record claims of US$123 billion experienced in 2005.

In addition to the earthquakes in Japan and New Zealand, severe flooding in Thailand and Australia triggered above US$10 billion in insurance claims. Two massive tornado events in the United States caused nearly US$14 billion in claims and the loss of more than 400 lives. Hurricane Irene cost the industry nearly US$5 billion in property damage.