Earthquakes Accounted For Highest Losses
The earthquakes that devastated parts of Chile and New Zealand [pictured)]were the largest source of losses to Bermuda’s re/insurance sector in 2010, according to a new report by industry analyst Guy Carpenter.Specialising in catastrophe insurance coverage, the 23 major Bermuda-based re/insurance carriers funneled billions of dollars of property insurance claims payments to homeowners and businesses around this year in the wake of natural disasters such as the two devastating quakes.
These dollars have helped stabilise regional economies by helping victims of natural disasters in hard-hit coastal regions rebuild and return to work.
The South American earthquake cost the global re/insurance industry $8 billion while there were $4 billion worth of insured losses associated with the New Zealand temblor, said Guy Carpenter & Co. – a leading US global reinsurance intermediary which analyses industry conditions and also advises insurance and reinsurance companies on the complex issue of risk.
Also this year, of the eight catastrophes that individually caused insured losses of more than $1 billion, five were related to severe weather and storms in the US, Australia and Europe.
The only man-made event to incur losses in excess of $1 billion in 2010 was the Deepwater Horizon oil rig explosion in the Gulf of Mexico, with the expectation that BP and its captive will cover most of the expenses, capping insured losses at approximately $3.5 billion.
Despite one of the most active Atlantic hurricane seasons on record, no hurricane made US landfall and insured losses in the US generally matched those of 2009, adding up to $11.2 billion in the first nine months of 2010, according to Guy Carpenter’s reckoning.
On the other hand, floods accounted for significant insured losses of $955 million in France and Central and Eastern Europe.
Guy Carpenter’s head of global business intelligence, David Flandro, commented: “Large losses in the first half of the year, coupled with low interest rates and depressed valuations, created a challenging environment for carriers in 2010.”
Meanwhile, the 2010 Atlantic hurricane season, which officially ended on November 30th, had the second-highest number of hurricanes since records began in 1851.
According to an analysis by Risk Management Solutions (RMS), the season saw the formation of 12 hurricanes, five of which intensified to major hurricane status.
The total number of named storms for the season reached 19, which is the third highest on record and almost double the long-term averages since 1950.
The research indicates that the Atlantic remains in a period of heightened hurricane activity and RMS director of catastrophe response, Neena Saith, comments: “The 2010 season is unique in having had such a high number of hurricanes without any striking the US.”
In total, the firm expects insured losses from the 2010 Atlantic hurricane season to be less than $500 million, despite reports that damage in Mexico from Hurricane Alex and Hurricane Karl reached around $7.5 billion, as only a minority of this is expected to be insured.
RMS, which specialises in the management of catastrophe risk, says it will be issuing a fully upgraded suite of hurricane models for the Atlantic basin early next year, with new models being introduced for the east coast of Canada, Bermuda, Mexico and Central America, including Belize, Costa Rica, Guatemala, Honduras, and Nicaragua.
He adds: “Moreover, the active nature of this year’s hurricane season reinforces the fact that catastrophe risk remains elevated as the reinsurance sector prepares for 2011 renewals.”
