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No. 2/2003 Natural Catastrophes and Man-Made Disasters in 2002: High Flood Loss Burden

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No. 2/2003 Natural Catastrophes and Man-Made Disasters in 2002: High Flood Loss Burden Sigma_2_03_engl_US 06.03.2003 16:29 Uhr Seite UM1 sigma No. 2/2003 Natural catastrophes and man-made disasters in 2002: high flood loss burden 3 Summary 4 Catastrophes in 2002: comparatively low insured losses despite the large burden from floods 9 Floods – a growing challenge for the insurance industry and the state 15 Tables for reporting year 2002 34 Tables on the major losses 1970–2002 36 Appendix: Terms and selection criteria Sigma_2_03_engl_US 06.03.2003 16:29 Uhr Seite UM2 Published by: Swiss Reinsurance Company Economic Research & Consulting P.O. Box CH-8022 Zurich Telephone +41 43 285 2551 Fax +41 43 285 4749 E-mail: [email protected] New York Office: 55 East 52nd Street 40th Floor New York, NY 10055 Telephone +1 212 317 5135 Fax +1 212 317 5455 Hong Kong Office: 18 Harbour Road, Wanchai Central Plaza, 61st floor Hong Kong SAR Telephone +852 25 82 5691 The editorial deadline for this study was Fax +852 25 11 6603 24 January 2003. Authors: sigma is also available in German (original Aurelia Zanetti language), French, Italian, Spanish, Chinese Telephone +41 43 285 2544 and Japanese. Rudolf Enz sigma is available on the Swiss Re website: Telephone +41 43 285 2239 http://www.swissre.com (under “Research & Publications”, Ivo Menzinger (section on floods) “sigma insurance research”) Telephone +49 89 3844 1774 Translation: Swiss Re Group Language Jens Mehlhorn (section on floods) Services Telephone +41 43 285 4304 Graphic design: Swiss Re Media Production Sonja Suter (lists of events) Telephone +41 43 285 5470 © Swiss Re All rights reserved. sigma co-editor: Aurelia Zanetti The content of this sigma edition is subject Telephone +41 43 285 2544 to copyright with all rights reserved. The information may be used for private or Managing editor: internal purposes, provided that any Thomas Hess, Head of Economic Research copyright or other proprietary notices are & Consulting, is responsible for the sigma not removed. Electronic reuse of the data series. published in sigma is prohibited. Reproduction in whole or in part or use for any public purpose is only permitted with the prior written approval of Swiss Re Economic & Consulting and if the source reference “Swiss Re, sigma No. 2/2003” is indicated. Courtesy copies are appreciated. Although all information used in this study was taken from reliable sources, Swiss Reinsurance Company does not accept any responsibility for the accuracy or compre- hensiveness of the information. The informa- tion provided is for informational purposes only and in no way constitutes Swiss Re’s position. In no event shall Swiss Re be liable for any loss or damage arising in connection with the use of this information. Sigma_2_03_engl_Inhalt 06.03.2003 16:29 Uhr Seite 3 Summary High property losses from flooding – overall loss burden 2002 below the long-term trend USD 13.5 billion in insured losses In 2002 losses from natural catastrophes and man-made losses cost non-life insurers USD 13.5 billion across the globe. This was markedly below the previous year‘s level of USD 35 billion.1 While natural catastrophes caused losses of USD 11.4 billion, property losses from man-made disasters totalled USD 2.1 billion. The most costly events were the floods in Europe and the storms in the US. Almost 24,000 fatalities; USD 42 billion In 2002 sigma recorded 344 events, of which 130 were natural catastrophes in total losses and 214 man-made disasters. Natural catastrophes claimed more than 11,000 lives, of whom 4000 died as a result of floods worldwide. In China almost 1000 people fell victim to flooding; in India and Bangladesh the figure was 800; in Nepal 480; and in Europe 170. Man-made disasters were responsible for 10,000 fatalities worldwide, with 7,300 people dying in transport-related accidents – bus crashes, ferry and plane disasters. Such figures reveal one of the drawbacks of the world’s growing mobility. Total losses arising from recorded events amounted to USD 42 billion, which is significantly below the average figure that has been registered since sigma starting compiling statistics in 1970. Terrorism threat still exists sigma registered 800 fatalities from terrorist attacks in 2002. Unlike in 2001, the insurance industry did not have to contend with major terrorism-related losses. However, the assaults in Bali and Djerba, Tunisia, which have been laid at the door of international terrorism, indicate that the world must remain ever vigilant. More intensive rainfall in the 21st century In 2002 floods and storms once again revealed the extent of their high loss – floods presenting a growing challenge potential. As a result of climate change, in the long term, insurers must expect to be confronted by an increasing number of extreme weather events; the reason for this being that it remains extremely probable that many areas of the world will witness an increase in the intensity of rainfall in the 21st century. The increased frequency of climate-related events is accompanied by cyclical changes (eg the appearance of El Niño). Heavy rainfall and the floods that occur in their wake thus present a growing challenge to the industry. Insurers today have refined methods of assessing their flood exposure. This holds out the promise of considerable development potential for the insurance industry in a number of countries. 1 The insured losses reported in sigma comprise those arising from property and business interruption losses. The selection criteria used in sigma are described in the Appendix on pages 36/37. All the losses from previous years in this study are adjusted for inflation and have been calculated at 2002 prices. Swiss Re, sigma No. 2/2003 3 Sigma_2_03_engl_Inhalt 06.03.2003 16:29 Uhr Seite 4 Catastrophes in 2002: comparatively low insured losses despite the large burden from floods Persistently high number of catastrophes since the end of the 1980s 344 catastrophes in 2002 sigma recorded 344 large losses in 2002, of which 130 were the result of natural catastrophes and 214 of man-made disasters. This figure is slightly above the average figure that has been recorded by sigma since the end of the 1980s.2 The chronological list of all large losses in 2002 reported by sigma can be found in the Appendix to this study.3 Together with the selection criteria described on pages 36 and 37, these guarantee the transparency of sigma statistics. Figure 1 250 Number of events 1970–2002 200 150 100 50 0 1970 1975 1980 1985 1990 1995 2000 Natural catastrophes Man-made disasters 24,000 deaths from catastrophes in 2002 11,000 fatalities from natural sigma’s records indicate that there were 344 catastrophes in 2002 in which catastrophes 24,000 people lost their lives – almost 11,000 of these dying as a result of a natural catastrophe. The earthquake of 25 March in Afghanistan alone claimed 2000 lives. When listed by cause, floods claimed the most victims, namely more than 4000 lives.4 13,000 fatalities from man-made Man-made disasters resulted in more than 13,000 fatalities in 2002. The disasters events with the most serious consequences were an arson attack on a train in India, which sparked off social unrest, and the sinking of the Senegalese ferry “Le Joola” off the coast of Gambia on 26 September. Broken down by cause, road catastrophes ranked second across the world, claiming more than 3300 lives. Table 1 Victims Date (start) Event Country The five worst catastrophes in terms of 2000 27.02.2002 Social unrest after arson attack on train India victims in 20025 2000 25.03.2002 Earthquake (6.0 on the Richter scale) Afghanistan, Pakistan 1863 26.09.2002 Overloaded ferry Le Joola capsizes Gambia 1500 01.12.2002 Cold wave Indian, Bangladesh, Nepal 1460 27.01.2002 Explosion in an army munitions depot Nigeria 2 The improving availability of information distorts the statistics, especially for developing countries, eg with regard to road accidents. 3 See Table 8, Chronological list of all natural catastrophes in 2002, page 17, and Table 9, Chronological list of all man-made disasters in 2002, page 25. 4 See Table 5, List of major losses in 2002 according to loss category, page 15. 5 See Table 7, The 20 most costly insurance losses in 2002, page 16. 4 Swiss Re, sigma No. 2/2003 Sigma_2_03_engl_Inhalt 06.03.2003 16:29 Uhr Seite 5 Number of victims claimed by catastrophes since 1970 Compared with the number of victims claimed by catastrophes over the last three decades, 2002 was below average, although the deaths from man- made disasters almost doubled. There are considerable fluctuations in the figures each year, with the major catastrophes having a lasting influence on average rates. Figure 2 Number* of victims Number of victims 1970–2002 Storm Bangladesh, Earthquake Earthquake Tropical cyclone Peru Tangshan, Gorky, 100000 China Bangladesh 10000 1000 1970 1975 1980 1985 1990 1995 2000 Natural catastrophes Man-made disasters * A logarithmic scale has been used for the number of victims. The major catastrophes that have taken place since sigma started compiling statistics number the following: storm and consequential flooding catastrophe in Bangladesh in 1970 with 300,000 fatalities; the earthquake that struck the Chinese city of Tangshan in 1976 with 250,000 fatalities; and Tropical Cyclone Gorky, which hit Bangladesh in 1991 and resulted in 138,000 fatalities.6 Insured losses in 2002 were comparatively low Insured losses of USD 13.5 billion – In 2002 insured losses from major events amounted to USD 13.5 billion, of of which USD 11.4 billion were due to which USD 11.4 billion were caused by natural catastrophes and USD 2.1 bil- natural catastrophes lion by man-made disasters.
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