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Insured catastrophe losses total $116 billion in 2011

Posted On: Apr. 1, 2012 12:00 AM CST

Insured catastrophe losses total $116 billion in 2011

Insurers sustained $116 billion in losses from natural catastrophes and man-made disasters last year, Zurich-based Swiss Re Ltd. reported.

Nevertheless, the insurance industry proved to be “highly effective” in dealing with the losses, which made 2011 the second-costliest year in insured losses. It was surpassed only by 2005, when a series of major hurricanes, including Katrina, battered the United States and added to estimated global insured losses totaling $123 billion.

Swiss Re's sigma report on natural catastrophes and man-made disasters said the March 2011 earthquake in Japan resulted in $35 billion in insured losses, making it the most expensive quake on record. Swiss Re noted that earthquake insurance penetration in Japan, particularly for commercial properties, is low. As a result, insurers will bear only 17% of total economic losses.

The February 2011 quake that destroyed parts of Christchurch, New Zealand, was the third-most expensive temblor in recorded history, causing about $12 billion in insured losses. Unlike Japan, quake insurance penetration is high in New Zealand, with insurers expected to cover 80% of the economic loss, Swiss Re said.

In addition, months of flooding in Thailand caused an estimated $12 billion in insured losses, while flooding in Australia added more than $2 billion more in insured damage to the year.

The United States was not spared catastrophe-related losses, either. A particularly violent tornado season resulted in insured losses of more than $25 billion, according to Swiss Re. But despite Hurricane Irene, the U.S. hurricane season proved to be relatively mild and kept overall insured damages below those of 2005.

Still, “the insurance industry proved highly effective in weathering the extreme events of 2011,” Swiss Re said. “Despite historic losses and a challenging financial environment, the industry played a key role in post-disaster recovery financing, bringing much-needed funds to affected populations, business and governments.”

The report warned, however, that the events “revealed increasing risk accumulation, particularly in emerging markets.”