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Global Warming and Natural Disasters Global Warming and Natural Disasters Prof. Dr. Peter Hoeppe Geo Risks Research Munich Reinsurance Company Geo Risks Research Department of Munich Re - Analyses of natural disasters since 1974 2 GEO-Colleagues in Princeton 2 GEO-Colleagues in Hongkong Major natural disasters of the last few years The last years have brought records in natural disasters in respect to: § Intensities § Frequencies § Damages and losses Dresden, August 2002 Economic losses of total event: €16 bn Insured losses: € 3.4 bn © REUTERS Heat wave of 2003, the largest humanitarian natural catastrophe in Europe for centuries Perceived Temperature on 8 August 2003 and excess mortality Source: German Weather Service, 2004 Heat stress 2,000 extreme † high 2,000 7,000 moderate † † light comfortable 15,000 light moderate † high extreme 4,000 Cold stress † 4,000 † UTC 13:00 Record Hurricane Season 2004 in the Caribbean and Florida Overview of the four Wind speed in hurricanes in 2004 gusts (km/h) causing the greatest losses Loss balance, total of all 4: Total economic loss: US$62 bn Insured market loss: US$31.5 bn 2004: 1st Hurricane in South Atlantic Hurricane Catarina off the Coast of Brasil, March 2004 Source: Image courtesy of Earth Sciences and Image Analysis Laboratory, NASA Johnson Space Center, Bild-Nummer ISS008-E-19646. http://eol.jsc.nasa.gov July/August 2005 – Flooding in India 944 mm within 24 hours, highest ever in India source: Reuters 24.7- 5.8 Flooding in India (1.150 fatalities) Economic losses (US$ m): 5.000 Insured losses (US$ m): 770 August 2005 – Flooding in the Alps For Switzerland the most expensive natural catastrophe ever Economic losses (US$ m): 3.000 (CH 2.100) Insured losses (US$ m): 1.700 (CH 1.500) August 2005 – Hurricane Katrina 6th strongest hurricane , largest losses of a single event source: AP 25.-30.8 Hurricane Katrina, USA (1.322 fatalities) Economic losses (US$ m): 125.000 Insured losses (US$ m): 60.000 (NFIP included) October 2005 - Hurricane Wilma Hurricane Wilma was the strongest hurricane since the beginning of measurements 21.-24.10 Mexico, USA, Caribbean: Hurricane Wilma Economic losses (US$ m): 16.000 Insured losses (US$ m): 10.000 Hurricane Vince (9 Oktober 2005) Vince, a hurricane in a region without hurricane risk (easterly North Atlantic, Madeira) Tropical Storm Delta 27 November 2005, 18.00 source: Delta Dundee University Economic losses (US$ m): 375 2005, a Year of Weather Extremes Never before since the beginning of records (1850) have so many named tropical storms occurred in the North Atlantic basin in one season: 27, of which 15 with hurricane strength (old absolute record 21 in 1933, resp. 12 in 1969)). MR NatCatSERVICE® One of the world‘s largest databases on natural catastrophes MRNatCatSERVICE® The database today: • Oracle database • From 1980 until today all loss events have been analysed and entered (18,000 data sets) • For USA and selected countries in Europe all loss events between 1970 and 1980 - other countries will follow consecutively (1,000 data sets) • Retrospectively all Great Disasters since 1950 have been analysed and entered (276 data sets) • In addition all major historical events starting from 79 AD – eruption of Mt. Vesuvio (3,000 historical data sets) more than 22,000 data sets Great Natural Disasters 1950 – 2005 Number of events 16 Flood Storm 14 Earthquake/tsunami, volcanic eruption Others (Heat wave, cold wave, forest fire) 12 10 8 6 4 2 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 © 2006 NatCatSERVICE, Geo Risks Research, Munich Re Great Natural Disasters 1950 Number of 16 geological 14 12 events 10 8 6 – 4 2005 2 0 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 © 1986 2005 Geo1989 Risks Research, Munich Re 1992 1995 1998 2001 2004 Great Weather Disasters 1950 – 2005 Economic and insured losses (as at March 28, 2006) 180 Economic losses (2005 values) 160 Insured losses (2005 values) 140 Trend of economic losses 120 Trend of insured losses 100 Mrd. US$ 80 60 40 20 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 © 2006 NatCatSERVICE, Geo Risk Research, Munich Re © 2005 Geo Risks Research, Munich Re Reasons for globally increasing losses due to natural disasters • Rise in population • Better standard of living • Concentration of people and values in large conurbations • Settlement in and industrialization of extremely exposed regions • Susceptibility of modern societies and technologies to natural hazards • Increasing insurance density • Change in environmental conditions - Climate Change Scientific evidence of a link between global warming and extreme events § It is very likely (confidence level >90%) that human influence has already at least doubled the risk of a heat wave exceeding the magnitude of the European heat wave 2003 (Stott et al., Nature 2004). § Climate change will intensify the maximum wind speed by 0.5 on the Saffir Simpson scale and precipitation by 18% in hurricanes until 2050 (Knutson et al., J of Climate 2004). § Major tropical storms both in the Atlantic and the Pacific region have already increased since the 1970s in duration and intensity by about 50 percent. The projections are, that this trend induced by global warming will continue in the future (Emanuel, Nature 2005; Webster, Science 2005) § Due to climate change the sea surface temperatures have increased already by 0.5°C (Barnett, Pierce, 2005, Science; Santer et al., PNAS, 2006) § Of all the factors that drive a major storm only the steady increase in sea surface temperatures over the last 35 years can account for the rising strength of storms in six ocean basins around the world (Webster et al., Science 2006) Changes in Sea Surface Temperatures NATL = North Atlantic WPAC = West Pazific SPAC = South Pazific EPAC = Esta Pazific NIO = Northern Indic SIO = Southern Indic SH = Oceans of the Southern Hemisphere Source: Webster et al. (2005), Science Vol. 309. Annual number of tropical cyclones formed in the North Atlantic in natural cold and warm cycles - Data source: NOAA, re-handling by Munich Re 2005 Tropical Storms + Hurricanes 25 Hurricanes (Category 1-5) Warm Cold Warm Major Hurricanes (Category 3-5) Phase Phase Phase Annual Frequencies of Major 20 Hurricanes in Warm or Cold Phases Cold 15 Phase 10 Number of Storms 5 4.1/year 2.6/year 1.3/year 1.5/year 0 1850 1875 1900 1925 1950 1975 2000 Mean annual normalized US hurricane losses in dependence on SST-anomalies Relationship between annual US TC losses and SSTA 25 40 35 20 30 25 15 20 10 (0.3°C in width) 15 annual loss [US$ bn] count of data points per class 10 5 5 0 class -0.45°C to -0.15°C class -0.15°C to 0.15°C class 0.15°C to 0.45°C sea surface temperature anomaly Light orange bars indicate mean annual losses according to R. Pielke’s loss figures; dark orange bars indicate the same with the difference that since 1954 Munich Re’s annual loss figures were used (left-hand axis). Blue triangles indicate number of data points per class (right-hand axis). Source: Faust, Munich Re 2006, work in progress. Health effects of global warming • Increased heat mortality • In some regions increase in UV radiation • Effects on food safety and diarrheal diseases • Spread of infectious diseases Conclusions § Natural catastrophes, especially weather related events, are increasing dramatically in number and magnitude. Loss potentials have reached new dimensions § Climate change is happening already, it cannot be stopped anymore, just attenuated § There is more and more scientific evidence for causal links between global warming and increasing frequencies and intensities of natural catastrophes § Climate change increases the risk of injuries and fatalities from extreme events but also from changing patterns of diseases § We have to adapt to the changing risks and mitigate greenhouse gas emissions § The insurance industry is very powerful for supporting climate protection, Munich Re since the 1970s has been and also in future will be one of the key players Increase of corporate responsibility activities in the field of climate change Publications and strategic board game Munich Re: many activities to promote climate protection - Member of The Climate Group - Member of the Global Roundtable on Climate Change (Jeff Sachs) - Board member of the European Climate Forum - Hosting side events at the annual global climate summits of the UNFCCC (COP) - UNEP-Financial Initiative Thank you for your interest! A new product of Munich Re supporting climate protection The "Kyoto Multi Risk Police" Target group: Institutions engaged in generating carbon credits from CDM* or JI** projects, e.g. banks, funds, project sponsors and aggregators as well as compliance investors Objective: The investor will be compensated for the loss, if carbon credits are not delivered according the plan and if at the same time the investor is obliged to deliver to a buyer in the secondary market or has to comply with reduction requirements himself. Advantage: Traditionally separated lines (e.g. physical damage, counterparty risk or country risk) are combined by adopting a holistic approach. => Prevention of gaps in coverage The concept is flexible and will also be applicable to JI* projects as well as extra– European mitigation schemes to come. The concept provides support for investors in carbon markets and contributes to the acceptance and feasability of the Kyoto mechanisms. Rolf Wieland * CDM: Clean Development Mechanism ** JI: Joint Implementation Munich Re: Initiator of international workshops To discuss the attribution of increasing losses to climate change with a high level group of participants from science and insurance industry Consensus (unanimous) statements of the workshop participants Syllabi: Climate change is real, and has a significant human component related to greenhouse gases.
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