INSURANCE: Increase in disasters costs industry $22bn By Andrea Felsted
Catastrophe losses cost the insurance industry over $22bn this year, making 1999 the fourth most expensive year for insurers on record, Swiss Re, the Zurich-based reinsurer said.
Swiss Re in its latest Sigma study said the figure, still provisional at this stage, would have been higher had losses incurred in earthquakes in Turkey and Taiwan been more widely insured.
The total monetary value of catastrophes this year was $65bn, with 52,000 lives lost.
The level of insured losses incurred in 1999, the highest since 1994, compares with insured catastrophe losses of $17.5bn in 1998, and total losses in 1998 of $65.5bn.
Whereas 1998 featured several large losses including hurricane Georges, which is estimated to have caused insured losses of $4.5bn, this year has seen a string of medium sized losses.
Catastrophes were also not confined to natural disasters, although these featured prominently, but also included a number of man-made disasters, such as fire or aviation losses.
Swiss Re said: "The trend towards high losses from natural catastrophes and man-made disasters seems to be continuing unabated."
The insurance industry is experiencing a period of higher claims, particularly in the property and casualty, marine and energy sectors, after several years when the loss environment was more benign. The Swiss Re figures follow comments made by underwriters that the industry this year has not been hit by one or two very large losses, but an accumulation of events which had resulted in claims in the medium range.
Swiss Re said there were six events in 1999 which resulted in insured losses of over $1bn.
Typhoon Bart caused the highest level of insured losses at $2.5bn, although it resulted in total losses of $3.3bn.
Hurricane Floyd, which lashed the US and the Bahamas in September, produced insured losses of $2.2bn, out of total damage valued at $7bn.
Although the Turkish earthquake, which left almost 20,000 people dead and 40,000 people injured, produced total losses of $20bn, insured losses totalled $2bn.
A series of tornadoes in the US mid-west resulted in insured losses of $1.5bn.
The earthquake in Taiwan, although it resulted in total damage valued at $14bn, is expected to cost insurers $1bn, while hail storms in Sydney also resulted in insured losses of $1bn.
Swiss Re said man-made disasters accounted for over $4bn of insured losses in 1999, with over half attributable to fires and explosions.
Particularly expensive events were an explosion in a US power station expected to cost insurers $650m, an explosion in a US aluminium plant which caused an insured loss of $275m, and an explosion in a US oil refinery, which is expected to cost insurers $247m. Aviation and space insurers wrote losses of $1.5bn.
Swiss Re said it was affected by the earthquake in Taiwan, the Sydney hail storm and flooding in Switzerland, although the Turkish earthquake had little impact, and losses from hurricane Floyd and Typhoon Bart were not large enough to trigger considerable claims for the reinsurer.