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The Cost of A Year Of Catastrophes

The heavy rains that brought deadly floods and mudslides earlier this year are a fading memory. But a sobering reminder of the devastation they caused across 28 provinces, particularly in human life, comes from the preliminary version of an annual assessment by the reinsurance company Swiss Re of the costs of catastrophes around the world.

It counts 260,000 deaths from natural catastrophes and man-made disasters this year, making it the deadliest since 1976. The overwhelming majority of them (220,000) occurred as a result of the Haiti earthquake. But three of the five most deadly occurred in China; the summer floods that killed 2,480; the Qinghai earthquake in April and its aftershocks  that killed 2,280; and the autumn flooding that killed 1,785. The two other events in the top six were the summer heatwave in Russia that killed 15,000 and the floods in Pakistan that killed 1,980.

None of the Chinese catastrophes were among the most costly to the insurance industry; the earthquake in Chile cost it $8 billion, almost a quarter of its total payout, to top the list of the most costly insured catastrophes of the year. By comparison the May 2008 quake in Sichuan, which killed 87,500 people, cost the insurance industry $372 million. Much of the destroyed property, typical of rural areas, would have been uninsured. The same is likely to have been true for this year’s Qinghai quake and floods. Only 1%-2% of the estimated $135 billion of total economic losses caused by the 10 largest floods in the country since 1980 was insured, according to a recent study by another reinsurer, Munich Re.

Swiss Re reckons total economic losses from catastrophes around the world this year will be $222 billion, more than triple 2009′s $63 billion. We’ll be able to see Swiss Re’s figure for China alone when the full report is published early next year. We expect that to be in the high tens of billions of dollars.

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