Knowledge series Topics Geo Natural catastrophes 2008 Analyses, assessments, positions

Australasia/Oceania version Contents

2 In focus

5 Hurricane Ike – The most expensive hurricane of the 2008 season 13 North Atlantic hurricane activity in 2008

14 Catastrophe portraits

17 January: Winter damage in China 20 May: Cyclone Nargis, Myanmar 22 May: Earthquake in Sichuan, China 24 May/June: Storm series Hilal, Germany

28 Climate and climate change

>>> Topics Geo Australasia/Oceania version

31 Data, facts, background

34 NatCatSERVICE

35 The year in figures 36 Pictures of the year Cover: 38 Great natural catastrophes 1950–2008 The picture on the cover shows the city of Galveston on the coast of Texas on 40 Geo news 9 September 2008 before Hurricane Ike made landfall. 40 Current corporate partnerships Inside front cover: 41 Globe of Natural Hazards This photo was taken on 15 September 2008 after Hurricane Ike had passed through. Apart from a few exceptions, the entire ­section of coast was razed to the ground. Geo Risks Research think tank

Environment and market conditions are changing at breathtak- ing speed. Demand for new coverage concepts for complex risks is constantly increasing. This calls for experience and steady further development of our specialist knowledge. In addition, we are continually networking with external partners in economics and research and entering into business-related cooperative relationships with leading experts.

In this issue of Topics Geo we introduce you to some of our cur- rent scientific partnerships. Our intent is to pursue research into new and emerging areas of risk, to make them manageable and thus expand the frontiers of insurability. Our latest product in the field of geo risks research is the Globe of Natural Hazards, which documents the geoscientific data and findings we have accumulated over a period of more than 30 years. Since early 2009, the new version has been available as a printed map and in digital form on DVD. Besides providing you with information on the globe’s most important innovations, this issue also contains the new fold-up World Map of Natural Hazards.

The natural catastrophe year of 2008 was one of the most devas- tating years on record. Two events alone, Cyclone Nargis, which devastated large parts of Myanmar in May, and the earthquake in Sichuan (China) on 12 May, claimed the lives of some 155,000 people. The number of persons reported missing is even now over 70,000. Losses of US$ 15bn made Hurricane Ike the costliest natural catastrophe for the insurance industry in 2008. Further catastrophe portraits deal with the exceptional snow losses in China at the beginning of 2008 and the storm series Hilal, which crossed much of Germany in late May. Hilal highlighted the need for improvements in the definition of loss occurrences. The storm series has prompted Munich Re to develop a transparent loss occurrence definition for natural hazards.

For our readers in the United States, Asia, and Australasia/ Oceania, we have again prepared topics and statistics of local relevance; these are enclosed in the respective editions.

I hope you enjoy reading this issue of Topics Geo and that the information it contains will be of practical use in your work.

Munich, February 2009

Dr. Torsten Jeworrek

Member of the Board of Management and Chairman of the Reinsurance Committee

Munich Re Topics Geo 2008 1

In focus

In 2008, the United States was hit by six hurricanes in close successions – Dolly, Edouard, Fay, Gustav, Hanna, and Ike. Above all, Ike caused billion-dollar losses in the United States and the Caribbean.

Hurricane Ike destroyed almost all the build- ings on the Bolivar peninsula in Texas. How- ever, buildings erected in accordance with the guidelines issued by the Institute for Business and Home Safety withstood the winds and storm surge. In focus

Hurricane Ike – The most expensive hurricane of the 2008 season

Ike was the most destructive hurricane of 2008. It Meteorological development was extremely difficult to estimate the loss in the immediate aftermath due to the sheer size of the From tropical disturbance to fully-fledged hurri- area affected and the impact of the dramatic storm cane with destructive force: Ike had the people in surge on coastal areas. the Caribbean, the USA, and Canada at its mercy for two weeks – with devastating consequences. Following relatively moderate seasons in 2006 and 2007, 2008 proved to be another year of extremes, 1 September – Ike classified as a tropical storm: underlining the increased warm-phase activity in Following moderate development in mid-Atlantic, the western part of the North Atlantic since 1995. the system was categorised first as a tropical Of the 16 tropical storms that occurred in 2008 depression 9 and, later the same day, as a tropical (including eight hurricanes), Ike was the one which storm. Ike intensified in mid-Atlantic in the days stood out from the rest. With the lowest central that followed. pressure recorded in any hurricane that year and average wind speeds of more than 230 km/h, it 3–6 September – Ike reaches hurricane status: caused widespread damage in the Caribbean, the Owing to the lack of wind shear in the atmosphere, USA, and Canada. the storm virtually exploded, in a mere six hours, into a Category 4 hurricane, peaking on 4 Septem- Its integrated kinetic energy (IKE) rating of 5.6 (on a ber with a recorded wind speed of 230 km/h (one- scale of 1–6) broke the record for Atlantic hurri- minute average) and a central pressure of 935 hPa. canes. The IKE rating measures the combined Ike weakened to a Category 2 storm in the next few de­structive potential of wind and storm surge. For days, but was upgraded to Category 4 on the comparison purposes, Katrina measured 5.1 on the Saffir-Simpson Scale on 6 September, just before same scale in 2005. Overall losses from Ike were it passed over the Turks and Caicos Islands. around US$ 38bn, of which US$ 15bn was insured. Thus, Ike ranks third, just behind Katrina (2005) and Andrew (1992), in terms of loss.

Munich Re Topics Geo 2008 5 In focus 7–9 September – First landfall: On the morning of Due to the enormous strong wind field and rela- 7 September, Ike swept across the Turks and Caicos tively low translation speeds, Ike triggered a severe Islands with winds of 215 km/h. It made landfall storm surge in the Gulf of Mexico of the kind nor- near Cabo Lucrecia on the north coast of Cuba that mally associated with a Category 4 hurricane. evening as a Category 3 hurricane. After crossing A band extending almost 500 km along the Gulf the provinces of Holguín, Las Tunas, and Camagüey, Coast between Louisiana and Texas was hit by a it moved out over the Caribbean Sea to the south storm surge up to 2–4 m deep. Maximum storm of the island. surge levels of 6 m were recorded in the Bolivar Peninsula area, the Bay of Galveston, and south of On 8 September, Cuba’s south coast was hit for a Port Arthur. second time at Pinar del Río. Ike retained hurricane force, but weakened considerably in the mountain- Ike soon subsided to a tropical storm, passing ous terrain. ­Dallas 150 km to the east before changing course and heading northeast as a tropical depression. 10 September – Ike refuels in the Gulf of Mexico: In the night of 9–10 September, Ike intensified sharply 14 September – Ike weakens still further, encoun- as it crossed the surface water of a warm current tering a cold front: Ike’s remnants then merged fed by the Caribbean. The result was a dramatic fall with a cold front moving eastward across the in central pressure from 963 to 944 hPa. However, USA. The ensuing low-pressure system brought there was no corresponding rise in maximum wind heavy rain and gale-force winds to the Midwest, speeds at the centre, which increased from 140 to the East Coast, and parts of Canada on 14 and only 155 km/h. Instead, the cyclone’s structure 15 September. changed, as energy absorbed from the warm sur- face waters was distributed over a very large area, Impact and losses creating an enormous strong wind field. Ike caused at least 168 deaths in the Caribbean and During the next two days, Ike headed northwest the USA, the countries worst affected being Haiti towards Galveston and Houston, Texas. Just before (74) and the USA (86). landfall on the US coast, the area of hurricane- force winds (up to 118 km/h) had a diameter of Many people in the Galveston area of the Gulf nearly 400 km, and the area of tropical-storm winds Coast failed to evacuate the danger zone on time, (up to 64 km/h) almost 900 km. This compares with despite stern warnings issued by the authorities. diameters of 350 km and 700 km respectively in the This had especially dire consequences on the case of Katrina. ­Bolivar Peninsula. The storm surge struck several hours before the hurricane had been forecast to 13 September – Severe storm surge as Ike hits US arrive, severing road links with the mainland. Many coast: Ike made landfall at 2.10 a.m. on the Texan people had to be winched to safety by helicopter, coast at Galveston, with winds of over 200 km/h but the flights were soon suspended as the wind (Category 2–3 on the Saffir-Simpson Scale). It con- strengthened. About 100 people were forced to tinued across the Bay of Galveston before making stay behind. landfall a second time near Baytown (Texas).

Hurricane Ike’s track

Wind speeds in km/h (SS: Saffir-Simpson Hurricane Scale)

Tropical storm (63–117 km/h) SS 1 (118–153 km/h) Chicago New York SS 2 (154–177 km/h) SS 3 (178–209 km/h) Nashville SS 4 (210–249 km/h) SS 5 (≥ 250 km/h) Houston Source: UNISYS Miami

Ike

Mexico City

6 Munich Re Topics Geo 2008 In spite of a robust concrete design, the foundations of many buildings erected directly on the coast suffered severe ­damage.

Caribbean losses: Worst affected of the Turks and that more than 90% of their customers were with- Caicos Islands were Grand Turk, North Caicos, and out electricity during the storm. Supplies were not Middle Caicos. Very few buildings escaped dam- fully restored until early October. age, and one third of homes sustained severe losses. A number of businesses and warehouses Texan Gulf Coast losses: Worst hit on the Texan were totally destroyed. Overall losses on the Gulf Coast were Galveston, the Bolivar Peninsula, islands were around US$ 500m. and the Port Arthur area. Galveston, population There was severe flooding on Haiti, where Hurri- 60,000, had been hit by Category 4 hurricanes in canes Fay, Hanna, and Gustav had already caused 1900 and 1915. The town was protected from the floods and landslides. The Caribbean island was full force of the waves by a sea wall constructed battered by four hurricanes over a three-week after the 1900 hurricane (cf. page 8, “Hurricane period, resulting in a humanitarian catastrophe, in in Galveston, 1900”). Even so, there was flooding which nearly 800 people were killed, over 300 of up to 2 m in places, the storm surge hitting reported missing, and about a million left home- the island’s exposed rear flank from the Bay of less. Cuba, hit by the record number of three exten- Galveston. The storm had a major impact on roofs sive (Category 3 or more) hurricanes in one year, and façades, whilst ground-floor flooding caused reported losses in the billions. More than two mil- slight structural damage but severe damage to lion Cubans had to be evacuated. contents. In particular, many buildings located outside the sea wall or on the Gulf Coast itself US losses: According to PCS (Property Claim were badly affected either due to their being of ­Services) estimates, insured losses in the USA wooden construction or, in the case of more resist- were US$ 11bn. This figure excludes losses covered ant, concrete structures, due to undermining of under the federal National Flood Insurance the foundations. Program (NFIP) and damage to offshore facilities. In all, over a million private household claims were submitted, 600,000 in Texas alone, where private household claims amounted to US$ 5bn. Although Texas was worst hit, Ike left its mark over an area extending as far as New Orleans, which was swept by 80-km/h gusts. The floodgates on the city’s canals were closed, and coastal communities evacuated. Parts of Louisiana were under more than half a metre of water. Apart from damage to buildings, more than two million people were without electricity, many power lines and distribu- tion systems having been damaged or destroyed. The two utility companies worst affected reported

Munich Re Topics Geo 2008 7 In focus The Bolivar Peninsula was a scene of total destruc- Downtown Houston was hit particularly tion. Over 90% of the buildings disappeared or badly. This photo is of the JPMorgan Chase were a total loss. The exceptions were those built to Tower, on which a large proportion of the window panes were destroyed. The brown IBHS (Institute for Business and Home Safety) windows have been temporarily sealed standards, which withstood the storm surge and with wooden panels and are awaiting Ike’s strongest winds. The region around Port replacements. Arthur adjoining the northern Bolivar Peninsula was also badly hit. A large number of petrochem- ical facilities are located here and several of these industrial risks suffered heavy losses.

Oil platforms were damaged as Ike whipped up waves up to 18 m high. In all, 50 out of 3,800 plat- forms were destroyed. At least 35 reported severe damage, and a further 60 minor damage. Oil and Losses in the Midwest, on the East Coast, and in gas pipelines were also hit. At least 17 oil refineries Canada: Ike weakened to a tropical depression and had to be shut down temporarily. then merged with a cold front extending deep into the Midwest and subsequently as far as the East Losses in Houston: Although the winds were not as Coast and Canada. The frontal system intensified strong in the Houston area as on the coast itself, due to the arrival of warm, moist air from the the sheer size attained by Ike was an important fac- south. This produced high winds and torrential tor there, since Ike extended further inland than is rain and led to storm damage, power cuts, and usually the case with minor storms. In Houston, flooding in Arkansas, Illinois, Indiana, Kentucky, façades and roofs, sign boards, satellite dishes, Missouri, Ohio, Pennsylvania, and parts of New and other non-structural elements suffered slight York. Ohio, Kentucky, and Indiana suffered the to moderate damage. The extent of the damage heaviest losses. In Ohio alone, nearly two million was largely determined by the quality and age of people were without electricity for several days. the buildings. However, in the city centre itself, the In Canada, the provinces of Ontario and Quebec glazed façades of a number of tower blocks were affected, record precipitation causing local ­suffered considerable damage. The most notable flooding. Winds of up to 80 km/h tore down trees example was the JPMorgan Chase Tower, on which and power lines, causing power failures in the almost all the lower windows on one side of the St. ­Lawrence River area, including Montreal. building were destroyed. The fact that the damage was confined to a relatively limited area may have been due to the funnel-like effect produced by the lines of tower blocks or to roof tiles dislodged from surrounding buildings and projected like ­missiles.

Hurricane in Galveston, 1900: Hurricane Ike was a reminder of the scenes of desolation witnessed over a hundred years ago

For the city of Galveston, Hurricane Ike was a hun- dred-year event in the worst sense of the term. When it was devastated in 1900 by a Category 4 hurricane with a track similar to Ike’s, Galveston was one of the largest ports on the Gulf of Mexico. Over 6,000 people (unofficial estimates put the figure much higher) lost their lives, many through drowning. Fortunately, this prompted the authori- ties to take decisive action. They commissioned the building of what was then a vast undertaking: the construction of the Galveston Seawall. The Wall prevented another disaster when a similar hurricane struck in 1915 and it was also instru- mental in warding off the worst of the storm surges in 2008. Although, unlike the 1900 hurri- cane, Ike did not cause a major catastrophe, it is nevertheless a sobering reminder, not just to the people of Galveston, of what could be in store in the near future. Galveston 1900

8 Munich Re Topics Geo 2008 Munich Re Topics Geo 2008 9 In focus Post-event loss estimates Loss surveys carried out immediately after the hurricane concentrated on locations at the centre: Due to Ike’s unusual nature, it was difficult to esti- They failed to take into account the huge area in mate losses in the immediate aftermath. Although which slight to moderate damage was incurred. initial market loss estimates were roughly in line Even in the central area, the extent of loss seems with the real figures (at least at the upper end of not to have been fully appreciated or registered. the scale), the losses incurred by a number of port- Further, many of the losses reported were actually folios concentrating on commercial and industrial caused by Ike’s precursor, Hurricane Gustav. business were drastically underestimated. What were the reasons for this, and what made Ike so Overall commercial and industrial losses were different? driven up by high individual risk amounts: This appears to be typical of this sector with events of The sheer extent of Ike was underrated: The area a certain scale, and not peculiar to Ike. The models with high wind speeds extended a long way inland. clearly fail to adequately reflect the fact that the Moreover, reconstruction of the wind field was loss span is much broader in this sector than in open to considerable interpretation due to the lack personal lines. of reliable wind readings. Loss statistics for commercial and industrial risks The area of coast affected by the storm surge was are relatively inadequate: The corresponding loss underestimated: A characteristic of Ike was the functions are less reliable than in the case of vast area of strong winds that extended over the private dwellings, for example. This is particularly sea. This resulted in a stronger storm surge than true of offshore energy risks. would normally have been expected for a hurricane of that intensity. Due to the special topographic Although it may seem paradoxical, it is actually conditions in the Galveston area, apart from the more difficult to accurately estimate the loss from storm surge from the open sea, Galveston Island a single event than to calculate the aggregate PML was also overrun by water from the lagoon to its (probable maximum loss) curve. The PML denotes rear. the occurrence probability of losses of various sizes and PML curves are calculated by simulating Reinforced frontal system – Separate event? Wind tens to hundreds of thousands of events (event speeds had already dropped, but reintensified set). In this way, the characteristics of the individ- when Ike’s final remnants merged with a frontal ual scenarios balance each other out, provided system. Does a reinforced frontal system consti- there is no systematic miscalculation in loss func- tute a separate event? tions or occurrence frequencies, for example.

What proportion of overall losses will consist of The experience from the estimates for Hurricane business interruption claims is not yet certain. Ike highlights the need to further improve the qual- Even at the time of writing, it is not possible to ity of the risk models for post-event loss estimates. gauge the extent to which losses are due to excep- Traditionally, estimates have been based on a tionally heavy business interruption claims caused selection of similar events from the event set of a by utility failures, non-availability of the work risk model. They do not, however, reflect all the force, or denial of access. characteristics of the individual event in detail. The question is whether it is in anyone’s interests to have quantitative loss estimates delivered in record time if they are not reliable. A rapid qualitative appraisal is needed for the immediate aftermath and the deployment of loss adjusters. However, the reputations of insurance companies and mod- elling firms are at stake when loss figures backed by insufficient data are published precipitately, so that it would be better to announce the estimates later, on the basis of actual losses reported, rather than race to publish.

10 Munich Re Topics Geo 2008 Conclusion Building codes: Significant improvements were made to Florida’s building codes following Hurri- Ike confirmed that all major hurricanes have their cane Andrew (1992), and all new buildings now own characteristics. However, it also raised a meet the relevant standards. Other states (e.g. number of general issues and renewed a number Texas, but especially Louisiana and Mississippi) lag of messages. behind, average building standards having been changed very little, despite the 2005 hurricane sea- Storm surge: More attention has to be focused on son. It is essential that the authorities be involved storm surge loss potential. Clearly, the situation to proactively raise construction standards, and varies according to coastal topography, but storm implement land-use regulations that will prevent surge is quite likely to be a major loss factor in hur- loss of human life, and minimise material damage. ricane scenarios involving Tampa, Florida, or New York. The insurance industry can play its part in limiting the risk by implementing measures such as appro- Low wind speeds: As with Wilma in 2005, damage priate premiums, clear wordings, adequate deduct- to tower block façades was surprisingly heavy in ibles, and high-resolution risk and location data, view of the relatively low wind speeds. This is a key especially where high sums insured are involved. starting point when considering loss prevention As well as underwriting instruments, more active measures, especially for business quarters in loss prevention is required, not least because the major cities. effects of climate change and the migration of people and values are likely to bring heavier loss burdens in highly exposed coastal regions.

Hurricane Ike’s wind field

Oklahoma Ike’s wind field extended over a huge area. The storm moved a long way inland with Arkansas high wind speeds.

Wind speeds in km/h Dallas (SS: Saffir-Simpson Hurricane Scale) Longview Tropical storm (63–117 km/h) SS 1 (118–153 km/h) Louisiana SS 2 (154–177 km/h)

Source: NOAA, ESRI ArcWeb ­ Mississippi Services: ­Digital Globe (MDA ­EarthSat)

Texas

Port Arthur Houston Cameron

Texas City Galveston Freeport

Munich Re Topics Geo 2008 11 In focus

The tropical storms and hurricanes of the 2008 season destroyed hundreds of thou- sands of buildings in the Caribbean, the United States, and Mexico. Overall losses came to over US$ 50bn, of which some US$ 20bn was insured. The overall death toll was nearly 1,000. This is a photo of Hurri- cane Dolly, which raged in the border area between Mexico and the United States with wind speeds of 160 km/h.

12 Munich Re Topics Geo 2008 North Atlantic hurricane activity in 2008

The 2008 hurricane season, with 16 each of the individual months of the – Lower than average atmospheric tropical storms including eight hurri- hurricane season (up to and including pressure at sea level from August– canes, was well above the 1950–2007 November) produced a figure that October in the main development long-term average (10.3 tropical was at least equivalent to the rounded region. Low pressure implies a ten- storms and 6.2 Atlantic hurricanes). average of the current warm phase. dency towards a less stable atmos- This increased activity was also phere with higher humidity in the reflected in the number of tropical Overall losses in the 2008 season lower area, creating conditions that storms and hurricanes that made losses exceeded US$ 50bn, insured favour convective processes as landfall on the US coast. For the first losses totalling some US$ 20bn. This encountered in tropical cyclones. time on record, six consecutive makes 2008 one of the most expen- tropical storms (Dolly, Edouard, Fay, sive hurricane years ever for the – Compared with the long-term aver- ­Gustav, Hanna, and Ike) made land- insurance industry. An elevated hurri- age, much lower vertical wind shear fall. Three of them were Category 3 cane loss potential must continue to (vertical difference in wind force hurricanes (Dolly, Gustav, and Ike), be expected in the continuing warm and/or direction) at the mid-August/ the long-term average being only phase. mid-September height of the hurri- two. Cuba was hit for the first time in cane season. High vertical wind one season by three major hurricanes The following factors have contrib- shear prevents or at least hinders (Category 3 and above). uted to increased hurricane activity the formation of tropical cyclones. and intensity: Conversely, low shear is conducive There were five major hurricanes to their formation. (Category 3–5 on the Saffir-Simpson – The Atlantic Multidecadal Oscilla- Scale) in 2008, again well above the tion (AMO) observed in the North – The failure of an El Niño event to long-term average (2.7). Atlantic since 1995, which also materialise in the Pacific in the late accounts for a deviation in (July– summer. This would have tended to The 2008 season was slightly above October) sea surface temperatures impede hurricane activity. On the the average of the warm phase that of up to +1.3°C over the long-term contrary, conditions were, on the began in 1995: just slightly in the case average in the main development whole, neutral. of tropical storms (1995–2007: 14.6) region of cyclones. and hurricane-force storms (1995– 2007: 7.9) but more distinctly in the case of major hurricanes (1995–2007: 3.8). Apart from June and September,

Number of named tropical storms in the North Atlantic

5 May–December monthly averages for 1950–2007, 1995–2007, and values for 2008

4 Average for 1950–2007 Average for 1995–2007 2008 3 Source: NOAA, UNISYS

2

1

0 May June July August Sept. Oct. Nov. Dec.

Munich Re Topics Geo 2008 13

Catastrophe portraits

Asia was hit by several major catastrophes in 2008: snow and ice brought parts of China to a standstill in January, whilst in May many livelihoods were wrecked in a matter of seconds when Sichuan was struck by a severe earthquake. In Myan- mar, tens of thousands were killed by a cyclone.

China was caught in the grip of a severe cold spell in January and February 2008. In all, 18 provinces were hit by heavy snow and freezing rain. Many areas suffered power cuts as a result of damage to electricity pylons and transformers. Catastrophe portraits

January: Winter damage in China

For weeks, China was caught in the grip of a severe ­periods with temperatures around freezing, were cold snap, the extent of the catastrophe revealing severely affected, the 2008 winter breaking all the vulnerability of the country’s power supplies. ­previous records. The winter loss potential had clearly been under- estimated. Overall losses People in the southern regions were virtually Meteorological causes and background unprepared for freezing rain and heavy snowfall. In January 2008, the weather situation was dom- The death toll in the 18 provinces concerned rose inated by a particularly intense high pressure sys- to 129, many the victims of road accidents caused tem over Siberia, which brought a steady stream of by the icy conditions. More than 1.6 million people cold air to China and triggered the cold spell. Cold had to be evacuated. Around 800,000 waited for air remained over continental China due to a several days at Guangzhou Station in the hope strong, subtropical zone of high pressure located they would be able to see in the Chinese New Year further south, in the Northwest Pacific. At the same at home. Collapsed electricity pylons and interrup- time, warm, moist air masses arrived in the coun- tions in coal supplies to power stations brought try from the Bay of Bengal. Freezing rain occurs in frequent power cuts. In the extreme conditions, wintertime when rain produced in a warm air mass more than 480,000 homes were destroyed and falls through a cold air mass at a lower level, sub- 12 million hectares of farmland damaged. sequently freezing on contact with the ground, power lines, and other cold surfaces. This freezing Insured losses rain transformed roads in China into skating rinks, The event caused insured losses of the order of whilst a thick layer of ice completely covered roofs US$ 1.2bn, mainly in the utilities sector. and the ground. Electricity pylons and transformers were damaged The catastrophe began on 10 January 2008. Freez- and power lines collapsed under the weight of ice ing rain instantly covered the ground in a sheet of and snow. Industry was also badly hit. Factory and ice, which failed to thaw due to the persistent cold warehouse roofs caved in, the standard lightweight spell. This, combined with heavy snow that fell in metal constructions found in the region being an area extending over approximately 1.3 million un-able to bear the weight of snow, although it was km², left much of Central and Southern China only 20 cm deep in some cases. As a result, stock ­covered in a thick layer of ice and snow for a period and machinery suffered water damage. Losses of several weeks. Guizhou, Hunan, and Jiangxi, under business interruption, agricultural, and resi- which do not normally experience prolonged dential covers were minor.

Munich Re Topics Geo 2008 17 Catastrophe portraits Reinsurance for losses caused by snow and ice load is generally provided under programmes containing standard occurrence defi nitions: hours clauses. However, such wordings are not always suitable in practice because they may not clearly Underwriting aspects: Defi nition of loss circumscribe the loss. Further alternatives may be occurrence considered such as winter aggregate excess of loss Most wordings stipulate that individual losses due coverage or an extension of the loss occurrence to the same cause are to be aggregated. However, clause. it is very diffi cult to establish a common cause where the loss is due to the weight of snow or ice. Underwriting aspects: High-voltage Has the loss been caused by the last snowfall, the transmission lines aggregate winter snowfall or the general weather The widespread physical distribution of power pattern? Some wordings further stipulate that indi- lines makes them highly susceptible to natural vidual losses with the same cause shall also be due hazard losses, particularly windstorms (typhoons) to one and the same event. However, this also and ice. Overhead lines harbour major loss accu- leaves room for interpretation. Does a prolonged mulation potential. Exposure and vulnerability winter constitute a single event? largely depend on the age of the network, the qual- ity of maintenance, and the standard of design If the last snowfall is held to trigger the loss occur- (distance between pylons, method of construction, rence, this gets round the problem of having to materials used). With regard to the underwriting of determine what weather situation constitutes an transmission and distribution (T&D) lines, special event. Accordingly, each roof collapse would be care must exercised in respect of risk defi nition, ascribed to a particular event. However, this risk quality, and sum insured. The January 2008 assumes losses can be attributed to a particular event showed that underwriting and claims prac- snowfall, which is only possible if comprehensive tice are not always in line with the special require- meteorological data are available. From a scientifi c ments of T&D risks, with in some cases an arbitrary perspective, it is the aggregate snow load, which defi nition of risk. may have accumulated from several snowfalls, that causes a roof to collapse, irrespective of – T&D sums insured under policies issued several number and chronology. years ago have not always been adjusted to take account of the current situation. In order to meet higher quality standards, T&D lines have been largely upgraded in recent years. As a result many policyholders are underinsured.

Atmospheric conditions

An area of high pressure over Siberia gave rise to a constant stream of cold air from the north (blue), whilst warm, humid air fl owed Siberian high Cold air into southern China from the south (red).

Subtropical high Warm, moist air

18 Munich Re Topics Geo 2008 – Policies have not provided for increased recon- Loss assessment struction costs that arise due to the urgent need In terms of insured losses, this event in China ranks to restore power. as the third most expensive winter event of all time, behind the 1993 winter damage and the 1998 – Apart from natural hazards, other factors also ice storm in the USA and Canada. have a significant impact on T&D line risks. For instance, other providers may be able to act as a For the Chinese economy, the 2008 winter was one back-up network, minimising downtimes. of the most expensive weather-related natural catastrophes on record, surpassed only by the Due consideration must be given to all these major floods in 1996 and 1998. Industrial and com- factors in order to obtain adequate terms and mercial insurance density in China remains very premiums and optimise claims handling. low. Only 3–5% of risks are insured although, in the utilities sector, the density of T&D insurance is From the reinsurer’s perspective, high-risk T&D high. lines should be included in treaties only if certain restrictions are applied: in general, T&D lines The loss potential of winter events in China is should only be covered up to a distance of 1,000 m enormous. If industrial and commercial insurance from the insured power plant. Standalone cover- density increases and, as expected, sums insured age should not be granted unless risk, coverage, are adjusted to reflect the current values of T&D and losses are absolutely clear on both insurance lines, losses due to similar events could be much and reinsurance side. higher in the future. The 2008 event clearly shows that winter loss potential has been seriously underestimated.

The three most costly winter events worldwide (1980–2008)

Year Event Overall losses* Insured losses * Fatalities 1993 Blizzard, United States and Canada 7,300 2,880 270 1998 Ice storm, United States and Canada 3,750 1,500 45 2008 Winter damage, China 21,000 1,200 129

*US$ m, 2008 values

2008 winter damage in China: Regions affected

Vast areas of the country (beige shading) Xinjiang experienced exceptionally low tempera- tures, heavy snow and freezing rain, a number of provinces being severely hit (red shading). Ningxia Qinghai Regions severely affected Gansu Henan Jiangsu Shaanxi Regions affected Heavy snow Freezing rain Hubei Anhui Sichuan Chongqing Zhejiang Jiangxi Hunan Guizhou

Yunnan Guangdong Guangxi

Munich Re Topics Geo 2008 19 Catastrophe portraits

May: Cyclone Nargis, Myanmar

Cyclone Nargis hit Myanmar on 2 May 2008. The The Myanmar government declared five regions as storm claimed over 85,000 lives, made hundreds of disaster areas: Rangoon, Ayeyarwady, Bago, Mon, thousands homeless, and caused devastation in and Kayin. The Irrawaddy (Ayeyarwady) Delta was vast areas. Insurance protection is not available in worst hit, virtually all homes being destroyed Myanmar at present, but microinsurance solutions there. The delta lies on average only 1–2 m above are under discussion. sea level. High wind speed forced seawater into the river’s distributary channels. Due to the very flat Scientific aspects landscape and sparse vegetation, the storm surge Nargis was the first cyclone of the Indian Ocean’s was able to penetrate almost unhindered up to 40 2008 season. In late April, a Category 2 storm kilometres inland. developed in the Bay of Bengal. After initially weakening, it gained in strength again as it headed Overall losses from Nargis are estimated to be towards the coast. Nargis attained its highest wind more than US$ 4bn. Insurance cover is not avail- speeds (Category 4) just as it reached the able in Myanmar due to the current political Irrawaddy Delta. Its strength diminished slowly as climate. it proceeded along the coast because roughly half of the storm was still over the Andaman Sea, from Microinsurance – Solutions under discussion which it continued to draw energy. Nargis struck Experts are looking into ways of using microinsur- the city of Rangoon (and its population of several ance to make good the lack of insurance cover for million) with wind speeds exceeding 130 km/h; it losses caused by events like Nargis. Although it rapidly weakened as it approached the mountain- will be far from easy to find microinsurance solu- ous ­border region between Myanmar and Thailand, tions that cover losses caused by cyclones and subsiding completely on 3 May. other large-scale weather-related perils, every effort is being made to develop corresponding As the cyclone swept across the Irrawaddy Delta products. with high wind speeds, it triggered a storm surge with heights of over 3 m. The situation was made Analysis worse by record rainfall and severe floods. Satellite Nargis was an exceptional event as far as Mynamar images show that an area of some 14,000 km² was is concerned, since cyclone-force storms are by no flooded. means an annual occurrence there. The analysis of historic events indicates that a Nargis-type cyclone Scale of damage has a return period of approximately 20 years. Cyclone Nargis is the worst storm in Myanmar’s history in terms of human losses. It is thought to have claimed more than 130,000 lives: the official figure is 85,000 deaths, with 54,000 missing. The disaster left over a million people homeless.

Loss figures 450,000 Buildings destroyed 350,000 Buildings damaged 6,000 km² Crop area and fish farms destroyed > 150,000 Livestock killed

20 Munich Re Topics Geo 2008 These are satellite images of Myanmar on 15 April 2008 before Cyclone Nargis (top) and on 5 May 2008 after its departure (bottom). Large parts of the country were swamped by record rainfall and a storm surge that reached heights of over 3 m (marked blue in the lower image).

Track of Cyclone Nargis, 2008 Cyclones in the Gulf of Bengal, 1948–2008 (selection)

Nepal Bhutan

Bangladesh China

Myanmar India Bago

Gulf of ­Bengal Thailand Rangoon Kayin Ayeyarwady " Rangoon Mon

Andaman Sea Sri Lanka

The map on the left shows the track of Wind speeds in km/h Source: UNISYS Cyclone Nargis in May 2008. The map on the (SS: Saffir-Simpson Hurricane Scale) right shows cyclones that have hit or threat- Tropical storm (63–117 km/h) ened Myanmar since 1948. SS 1 (118–153 km/h) SS 2 (154–177 km/h) SS 3 (178–209 km/h) SS 4 (210–249 km/h) SS 5 (≥ 250 km/h)

Munich Re Topics Geo 2008 21 Catastrophe portraits

May: Earthquake in Sichuan, China

On 12 May 2008, the province of Sichuan was struck Losses by a strong earthquake. At least 70,000 ­peo­ple Losses were largely concentrated in a long, narrow died even though no major city was directly belt along the fault area in the transition zone affected. The earthquake claimed the highest death between the Tibetan Plateau and the Sichuan toll of any natural catastrophe in China since the Basin. Many severely damaged villages and towns Tangshan earthquake in July 1976. were located on valley bottoms, having been built on the saturated sediments of the rivers that had Scientific aspects and features formed the valleys. These sediments amplified the The magnitude 8.0 earthquake occurred along destructive power of the shaking. the Longmenshan range in the west of Sichuan at 2.28 p.m. local time. The rupture extended north- Hundreds of “quake lakes” resulted in the immedi- westwards from the epicentre near the city of ate aftermath, landslides forming natural but Dujiangyan over a distance of more than 200 km. unstable dams that impounded the waters of the The Longmenshan fault zone does not manifest rivers. Enormous efforts were made to prevent an itself as an obvious, single, clear fault line at the uncontrolled breach of the Tangjiashan quake lake, surface. GPS data had indicated almost no move- which was threatening more than a million people ment along the fault. Strong earthquakes had been downstream. However, this meant inundating reported in recent centuries along adjacent sys- cities already devastated and evacuated, such as tems to the north and south but not directly along Beichuan. Quake lakes caused by landslides this fault system. The most recent earthquake in continue to be a very real threat. Precisely how the region occurred in August 1976, when the city dangerous the temporary lakes can be was shown of Songpan, some 100 km further north, was struck by an earthquake that shook Sichuan Province in by two magnitude 7.2 tremors. The 1933 Diexi 1786, when a landslide dam burst killing more than earthquake in the same region also caused signifi- 100,000 people. cant damage. Sichuan earthquake confirms past experience Shaking during the Sichuan earthquake exceeded the maximum assumed in China’s official building – Although the shaking exceeded the maximum code map by a factor of 4–6. Comparison of aver- assumed in China’s official building code, build- age slip rate along the fault with offset during the ings that met code standards were in many cases earthquake, and paleoseismic analysis indicate a better able to withstand the earthquake. return period of more than 1,000 years for an earth- Even in the worst affected areas, many well-built quake of this strength along the fault zone. Earth- constructions suffered only minor cracks. quake hazard in the area is therefore still consid- ered moderate. – The implementation of a stringent building code for new structures has not been supplemented by measures for reinforcing older structures. This had previously been identified as a serious prob- lem, especially in economically under-developed regions.

Loss figures Fatalities 70,000 Missing 18,000 Injured 374,000 Buildings (total loss) 5.3 million Buildings (damaged) 21 million Direct overall losses US$ 85,000m Insured losses US$ 300m

22 Munich Re Topics Geo 2008 Earthquake on 12 May 2008 and aftershocks: Intensity field model

The map shows the location of the epicentre (blue) and the intensity field. Aftershocks (up to 12 September 2008) of intensity V or more are marked white.

Intensity: Low High

Epicentre Aftershocks

– Many soft-storey constructions collapsed In the last few years, due to intense competition, because the lower floors were not rigid enough insurers have often included earthquake exten- to withstand horizontal earthquake loads. sions at no extra charge as a way of attracting busi- ness. This was in line with long-term experience. – Most of the destruction, however, can be attrib- Since 1976, there had been no truly catastrophic uted to unregulated, non-engineered structures. earthquakes, most natural catastrophe losses hav- Many buildings were constructed with simple ing resulted from typhoons and flooding. The May means and materials, generally consisting of 2008 disaster showed that the earthquake risk, unreinforced concrete blocks, loosely connected contrary to widespread perception, is far from neg- with mortar, with a wooden-frame structure and ligible. Significant losses can and do arise from a light shingle roof, thus offering little lateral this peril. This has to be adequately reflected in resistance. Widespread destruction of this kind of the price of cover. construction was observed and contributed sig- nificantly to the devastation. Due to Sichuan’s very low insurance density, the insurance industry did not significantly contribute Conclusion to financial compensation of the losses. Earth- The Sichuan earthquake was a rare and extreme quake coverage has hardly been offered to private event. Nevertheless, it is duly represented in homeowners up to now. One approach being Munich Re’s probabilistic earthquake model for tested in the field is to provide minimum natural China, which translates the direct and indirect hazards’ cover. As in other regions that have suf- effects of more than 250,000 stochastic earth- fered comparable events (for example following quakes into losses for the individual client port­ earthquakes in Taiwan and Turkey in 1999) the folios. answer may well be to establish a pool providing basic natural catastrophe coverage. The estimates of insured losses were largely unre- liable due to the need for subjective assumptions to complement the limited exposure information available. Spatial resolution was inadequate and there was not even minimal information on the types of risk covered. Often, it was not even clear exactly what the cover included. Insurers had gathered far too little information about the risks and had communicated even less to reinsurers and brokers.

The Sichuan earthquake is a clarion call for the insurance industry. In consequence, clear data standards for risk management and reporting between insurers and reinsurers have to be defined – already common practice in other coun- tries. This clearly includes accumulation assess- ment zones (CRESTA zones) for natural hazards. Current province-level reporting has proved inade- quate. Four-digit or six-digit postcode zones would provide far more realistic risk assessments.

Munich Re Topics Geo 2008 23 Catastrophe portraits

May/June: Storm series Hilal, Germany

A series of thunderstorms swept over Germany In the early hours of the following day, storms from the end of May to the beginning of June 2008. caused flooding in Luxembourg, the Rhineland- Hilal highlighted above all the problems involved Palatinate, and North Rhine-Westphalia. in distinguishing between different loss occur- rences – a clear-cut and transparent definition is in On the morning of 30 May, severe hail swept over the process of being developed. many parts of North Rhine-Westphalia. Hailstones of up to 5 cm caused severe losses in Düsseldorf, Meteorological background and chronology Detmold, and Krefeld. Tens of thousands of cars The storms formed along a stationary air mass were damaged in Krefeld alone. boundary separating warm, moist Mediterranean air in the southwest from dry air in the northeast. Over the next few days, further storms caused There was a convergence zone between high pres- heavy losses in eastern Germany. On the evening sure over Scandinavia and low pressure over of 2 June, torrential storms led to flash flooding France and Southern Germany. In such a situation, and inundation in Baden-Württemberg. One of the air masses from various directions flow towards worst hit areas was the Killertal in southwest Ger- one another and are forced to rise. This enables many, where three people died in flash floods. very large thunderclouds to form, with heights sometimes reaching 12–14 km. Temperatures at Loss occurrence definition these altitudes can be as low as –65°C, conditions Owing to the meteorological situation encountered that are perfect for the generation of large hail- during Hilal, the loss occurrence definition stones. acquires particular importance. The terms and con- ditions of individual contracts incorporate standard On the evening of 28 May, the storm series named natural hazard loss occurrence clauses, which com- after the low-pressure system Hilal began with monly take one of the following three definitions thunderstorms, hail, and local flooding in the west as a basis for windstorm and flood events. of Germany, particularly in the Dortmund area.

Loss figures Overall losses US$ 1,500m €1,100m Insured losses US$ 1,100m €800m

Surface pressure chart for 30 May 2008

Severe thunderstorms formed along a ­stationary air mass boundary sep-arating warm, moist Mediterranean air in the ­southwest from dry air in the northeast.

Source: Verein Berliner Wetterkarte

24 Munich Re Topics Geo 2008 This photo was taken at the Bad Kissingen recreational airfield. Strong gusts from Hilal lifted the white powered glider ten metres into the air and dropped it unceremoniously onto a light aircraft. The insured loss was €55,000.

Losses are aggregated if they Loss events are thus only indirectly attributable to – evolve from a single overall weather pattern, the general weather pattern, which, though – or can be attributed to what is considered in increasing the occurrence probability of storms meteorological terms a single storm and/or and thunderstorms, has only a limited influence on hailstorm event, their location, time, and duration. – or evolve from a single atmospheric disturbance. For this reason, the losses from the winter storm The feature common to all three definitions is that series in 1990 and 1999 were not aggregated on the the occurrence is limited to a maximum of 72 hours. basis of the general weather pattern prevailing in Flood losses can be aggregated if they occur each case – although this certainly made their within periods ranging from 168 to, in some cases, occurrence more likely – but on the basis of the 504 hours. However, losses can only be aggregated respective local pressure systems, e.g. Lothar and in a contiguous area of flooding. This restriction is Martin in 1990 and Vivian and Wiebke in 1999. not always explicitly applied to storm or hail events. What matters is that the pricing and accu­ In the summer of 2007, floods in the United King- mu­lation loss models should be based on the same dom coincided with severe losses in Germany’s hours clauses. On closer examination, the com- Middle Franconia due to heavy rain associated with mon occurrence clauses – and their often quite a thunderstorm. In theory, it would have been pos- different wordings – are inadequate when meteor- sible to aggregate the losses from these two events ological conditions like those of Hilal are to be as long as the occurrence definition did not require factored into the contracts. We will now look in a geographical connection between them. detail at the different wordings and their impact on the loss occurrence definition, taking the example The same applies to Hilal. The series of severe of Hilal as a basis. weather events formed along an air mass bound- ary that lasted from 28 May to 4 June approxi- “One and the same general weather pattern” mately. However, the German Weather Service reported two distinct general weather patterns in According to the definition used by the German Europe during this period – a southeast cyclonic Weather Service, a “general weather pattern” is an pattern from 28–31 May followed by a high North “average distribution of pressure at sea level and Sea-Fennoscandian cyclonic pattern lasting until in the mid-troposphere over a wide area (e.g. 7 June. Europe and parts of the North Atlantic) lasting for a period of at least three days”. The general weather Accordingly, all losses occurring during the two pattern determines the essential character of a periods would have to be aggregated separately, weather period, whereas the weather itself may even though the pressure system (the air mass change due to small-scale pressure systems whose boundary) was the same. One moot point, how- tracks follow a similar course. Consequently, an ever, is the geographical connection between the occurrence clause based on this definition will not events. This is not easy to resolve since large precisely correspond to an event as it actually thunderstorm systems move slowly over a long occurs. This is because losses are not caused by period of time. general weather patterns prevailing over the entire continent but by air pressure systems crossing an area and – on an even smaller scale – by individual storms, torrential downpours, and hailstorms.

Munich Re Topics Geo 2008 25 Catastrophe portraits

On 1 June 2008, the roof of a DIY market collapsed in Schwarzenberg (Saxony).

All the established models used in the market, for definitions because there is no better way of instance, take individual pressure systems in the collecting data from past events. Moreover, with case of winter storms or individual hailstorms as no clear-cut definition of what “in the meteoro­ the basis for defining loss occurrences. Conse- logical sense” means, the terms “storm” and quently, these models are not directly applicable to “hail” are so widely open to interpretation that contracts that aggregate all losses occurring dur- lawyers would speak of a “vague legal concept”. ing a single general weather pattern into one single loss occurrence. Applying the model results to this “One and the same atmospheric disturbance” loss occurrence definition is an extremely precar- ious undertaking. Similarly, “atmospheric disturbance” is not clearly defined in meteorological science and thus “A storm and/or hailstorm to be considered one requires interpretation. If “atmospheric event in meteorological terms” disturbance” is deemed equivalent to a “high- pressure or low-pressure system”, the clause The advantage of this definition lies in the attempt initially provides a relatively conclusive framework to define occurrences on the basis of actual causal for the majority of hazard situations. Winter storm relationship. In practice, however, the formulation events are thus defined as individual occurrences, “storm and/or hailstorm to be considered one whereas a number of thunderstorms can be event in meteorological terms” is not unproblem- aggregated into one occurrence provided they atic. Strict application of this definition would have formed within the same pressure system. mean in the case of Hilal, for instance, that each individual thunderstorm cell and the ensuing hail- In the case of Hilal, this means that all events storm would count as a separate occurrence. occurring within a period of 72 hours are to be Whilst this may appear at first sight desirable for aggregated. However, this reveals one of the draw- risk assessment and pricing purposes, it is impos- backs of this definition. As described above, the sible to make such a fine distinction between loss natural hazard models commonly used in the occurrences both in spatial terms, given present- market attempt to separate all events, including day meteorological measuring techniques, and in thunderstorms. If cover is provided on an occur- temporal terms, given the fact that it is difficult to rence basis, this can lead to imprecision in the determine the time and place of losses with the evalu-ation. One way of addressing this issue and precision needed to allocate ensuing claims to, for maintaining pricing consistency would be to intro- example, one of two thunderstorms occurring in duce a 24-hour clause for thunderstorm and hail quick succession. events. These are determined to a large extent by the sun‘s diurnal movement – even if the pressure On the other hand, however, risk assessment is remains stable over a period of several days, as also based on such imprecise loss occurrence was the case with Hilal – and can therefore be separated into individual events using a daily mode of observation.

26 Munich Re Topics Geo 2008 Flood losses A loss occurrence definition that is acceptable to Summer thunderstorms are often associated with the insurance industry has to meet the following heavy rain that results in flash floods and local criteria: The definition inundation. The standard clauses allow losses to be aggregated if they occur within periods ranging – must be coherent in scientific terms, as transpar- from 168 to 504 hours. This may be eminently ent as possible, and unambiguous; appropriate in the case of widespread river flood- ing, in which the gradual progression of the flood – must be compatible with risk assessment tech- wave over a considerable period can lead to indi- niques and models and thus with pricing; vidual losses at different locations. However, there is no argument in its favour in the case of flash – must also enable practical loss settlements floods, which are confined to a specific area and between insurer and reinsurer. last for only a short time. A clearer distinction needs to be drawn between the various flood Last summer’s severe weather events have types. prompted Munich Re to develop a clear-cut loss occurrence definition for natural hazards in Conclusion Germany. The definition will take account of all the In recent years, the market has developed many issues and requirements described in this article, different definitions, based essentially on specific the aim being to establish greater clarity and trans- aspects of atmospheric perils, i.e. windstorm, hail, parency in the processes of risk assessment and heavy rain – often to the detriment of the requisite claims settlement. transparency in risk assessment and modelling. Hilal in particular showed that using a general weather pattern to define an occurrence is open to criticism. But all the other standard clauses also lack a completely convincing loss occurrence def-inition that can be applied to all possible event types.

Storm series Hilal: Heavy rain, hail, and tornadoes from 28 May to 4 June 2008:

The data from the ESWD (European Severe Weather Database) provide a good indi­ cation of the places where tornadoes, large hail (≥2 cm), and heavy rain were recorded during the storm series. The criteria applied in the case of rainfall were large volumes of precipitation that were unusual for the location or produced losses.

Torrential rain Tornado Large hail

Source: European Severe Weather Database

Munich Re Topics Geo 2008 27

Topics Geo Annual Review of the Oceania Natural Catastrophes 2008

Content

To our readers 1 Carbon is the Currency of Climate Change 2 Queensland: Not always the Sunshine State 6 A new warning system for Tonga 10 Oceania natural catastrophes 12 Notable Oceania Events in 2008 16 Pictures of the year 2008 17

Munich Re Australasia Munich Re Group

To our readers:

Welcome to the first “Annual Review of Oceania Natural Catastrophes”. This and future issues of the global edition of Topics Geo – with its traditional review of natural catastrophes around the world – will be supplemented by a special section such as this for our clients in the Oceania region.

Our objective with this new concept is for Topics Geo to combine information of global significance, alongside developments within our own region, including an analysis of natural catastrophes of regional significance that occurred over the past year.

In this edition the supplement includes:

• Information on plans to introduce a carbon pollution reduction scheme in Australia. This initiative, while still to be finalised, presents unique opportunities and challenges for insurers and reinsurers as efforts to reduce the impacts of climate change intensify.

• An analysis of the Queensland floods that occurred in January and February of 2008 and which resulted in extensive damage to important export industries. These events were a timely reminder of the importance of understanding risks when underwriting in regions subject to severe weather events.

• The development of a new early warning system for the Kingdom of Tonga which will provide residents with advance notice of approaching storms, tropical cyclones and other natural hazards.

• A review of severe natural catastrophes that occurred in the region which caused fatalities as well as economic and insured losses.

I hope you will find Topics Geo and the Oceania supplement to be interesting and informative.

Heinrich Eder Managing Director Munich Reinsurance Australasia

Munich Reinsurance Australasia – Oceania Topics Geo 2008 1 Carbon is the Currency of Climate Change

Impacts of climate change are being observed globally, while locally Australia has much to lose. Business thinking around climate change fundamentally shifted in 2008 and the forthcoming implementation of the Carbon Pollution Reduction Scheme (CPRS) in Australia, while raising many questions, will steer corporate decision making towards a low carbon economy and create opportunities for insurers to provide new products in response.

In Australia, temperatures are projected to rise How does the CPRS work? by up to five degrees by the end of this century. Likely consequences are that the frequency and The CPRS – the Australian Emission Trading intensity of natural disasters such as bushfires, Scheme – is a market-based scheme, due to cyclones, hailstorms and floods are changing come into force on 1 July 2010. For this to for the worst. Droughts are likely to be longer happen, legislation will need to be passed by and more intense and agricultural production Parliament by mid 2009. will be severely impacted in many areas. Flora The proposed CPRS is intended to provide a and fauna, along with significant ecological financial incentive for businesses to reduce their areas such as the Great Barrier Reef and Kakadu Greenhouse Gas (GHG) emissions. Although the Wetlands will be under threat and consequently scheme will cover 75% of Australia’s emissions the tourism they support. Rising sea levels and and involve mandatory obligations for around increased tidal surges will impact some coastal 1,000 entities, a large proportion of Australia’s communities. businesses will not face new regulation (see As Australia and the world comes to terms inset for coverage). with the threats posed by climate change, the The Federal Government has committed to a Australian Government has released its White long-term target of a 60% reduction in GHG Paper on the proposed design of the Carbon emissions from 2000 levels by 2050. It has also Pollution Reduction Scheme (CPRS). Firm committed in the medium-term to reduce national commitments towards reducing carbon pollution emissions by between 5% (mandatory) and 15% have been announced. (dependent on other countries responses) below This article explains the underlying principles 2000 levels by the end of 2020. Depending on of the proposed trading scheme and discusses which target is adopted the rate and timing of how the insurance industry can assist as emission reductions will be defined. Australia’s Australia and the world move towards a lower emission targets will be derived by net national carbon pollution economy. emissions, with imported units counted as contributing to meeting the national target and exported units not being counted.

Coverage of the Scheme

The coverage of the scheme will The following are also covered The following will be covered determine which entities are from the start: voluntarily: included and who is liable for their emissions. • Stationary energy (emissions • Reforestation, i.e. the conversion from fuel consumption for of land to forested land that Only large entities with direct electricity generation, fuels did not contain forest on emissions of 25,000 tonnes of consumed in manufacturing, 31 December 1989. However

CO2 equivalent (tCO2e) per year or construction and commercial deforestation i.e. the conversion more are covered in the scheme. sectors and other sources such of forested land to an alternative, This only includes businesses that as domestic heating/cooling) non-forest use, is excluded. release GHG as a direct result • Transport (land and air traffic) of an activity, such as energy The following are to be covered • Industrial processes production (scope 1 emissions) in the future: and does not include electricity • Waste • Agriculture will be covered no consumed (scope 2 emissions). • Fugitive emissions (e.g. leaks) earlier than 2015, with a decision from oil and gas production to be made in 2013.

2 Munich Reinsurance Australasia – Oceania Topics Geo 2008 The CPRS is a “cap and trade scheme”, whereby In terms of the trading component, a business emission limits will then be used to set the that is covered by the scheme must give up a

required cap on the annual amount of emissions permit for each tCO2e emitted during the year. for the covered entities. The lower the cap, the Conversely, any permits not required can be more emission reductions will be required across sold on the market. Additionally, they can use Australia. The number of tradable Australian carbon credits generated by projects initiated by carbon pollution permits will be equal to this cap. the Kyoto Protocol. This means businesses have

The cap is measured in tonnes of CO2 equivalent a choice of buying permits or credits, reducing (“tCO2e” – see inset for definition) and each their emissions, or both – whichever is the most of these tCO2e will require a carbon pollution cost effective for them. The CPRS will not set permit. For example, if the cap was set at 100 limits on the emissions of an individual business,

million tCO2e for a year, then 100 million permits however a business will need to have permits would be issued in that year. The cap is initially that account for every tonne of emissions. set for a period of five years. The permits will be made available to the market each year either by auction through Carbon dioxide (CO2) is one of six major the Government or free allocation. Industries greenhouse gases identified by scientists. participating in international markets, who Each of the six gases has a different global cannot pass on carbon permit costs, will receive warming potential. CO2 is used as the base free permits where increased costs make them

against which to measure the other five uncompetitive. In line with the tCO2e emitted gases in units of tonnes, hence the use of during the year, permits must be surrendered tonnes of CO2 “equivalent” (tCO2e). back to the Government.

Over time the market place should ensure that the emissions cap is achieved at the least cost to the economy. As the price on carbon

is introduced at an initial cost of A$25/tCO2e, the relative prices of goods and services will change. The cost of emission intensive goods is expected to increase, providing an incentive for consumers and businesses to adjust their behaviour to ultimately achieve a reduction of emissions.

The Agincourt number three reef and the Quicksilver Eight pontoon on the Great Barrier Reef, Queensland. A team of researchers have placed a shade cloth 5m x 5m on the surface of the ocean to protect the coral from the sun which is causing bleaching on the reef.

Munich Reinsurance Australasia – Oceania Topics Geo 2008 3 The fact that there is a limit on carbon permits The tradable carbon credits issued under means that the opportunity to generate carbon the CDM are known as Certified Emission emissions is also limited. Subject to external Reductions (CER) and under the JI initiatives influences, this scarcity is likely to result in the referred to as Emission Reduction Units (ERU). carbon pollution permit having a price which Each CER or ERU certifies the reduction or

will be determined by the market (see insert avoidance of one tCO2e emitted into the for example). atmosphere using low pollution technology, compared with what would have occurred without the initiative. A manufacturer covered by the scheme currently emits around 100,000tCO2e per Low polluting activities include, for example, annum. Hence 100,000 permits will need to wind power, biomass, solar energy and be surrendered if they intend to continue to hydroelectric power but also incorporate emit 100,000tCO2e in the compliance period developments that are designed to increase denoted by the Australian financial year. energy efficiency such as waste heat recovery. The move to lower emission energies, for If the carbon permit price was A$25, and example, using more gas instead of coal (fuel they were not offered free permits, their switching) and efficient waste management that liability would be A$2.5m. They have a choice extracts methane from landfills is also included. to purchase 100,000 permits or reduce their emissions if it is more cost effective to do so. Carbon business opportunities in Australia To reduce their carbon liability, the manufacturer could decide to invest in low emission The introduction of the CPRS in Australia creates technology which would reduce its liability, challenges and opportunities for the insurance

for example by 25,000tCO2e per annum, and industry to adapt and develop new products. purchase permits to pollute up to 75,000tCO2e. Some products are already in the market and with the introduction of new technologies to reduce carbon emissions come new possibilities for the insurance industry. The Australian CPRS has the benefit of learning from the European Union Emission Trading • Carbon delivery (protection) insurance Scheme (EU ETS), where in hindsight permits – the Kyoto Multi Risk Policy were over-allocated in the first phase. The result was that supply exceeded demand and the Munich Re offers a product for clients worldwide price collapsed. This experience will hopefully known as the Kyoto Multi Risk (KMR) policy. influence the allocation of Australian carbon Its aim is to protect both the sellers of carbon pollution permits. credits (project owners and developers) and buyers (such as banks, investment funds, The Kyoto Protocol project developers, aggregators and compliance buyers). The product encourages and protects The Kyoto Protocol established three investments in both JI and CDM projects by mechanisms to make it economically attractive insuring either the project assets themselves, to achieve GHG reductions. One mechanism the non-delivery of carbon credits, or both. allows the trading of emissions between countries, while the other two are project- KMR is a multi-line tailored product, which can based and known as Joint Implementation (JI) provide coverage for a wide range of risks, such and Clean Development Mechanism (CDM). as physical damage, machinery breakdown, These mechanisms enable countries to reduce political risks and supply-side, along with their GHG emissions in their own country as performance-related risks, such as insolvency, well as being credited for GHG reductions in weather conditions and technical performance. other countries. Although some of these are conventional risks, carbon credit non-delivery is a new risk, in The key conceptual difference between JI and respect of a new financial asset. CDM is the target country. In JI projects, the target country must have a GHG reduction How does the KMR relate to the Australian commitment under the Kyoto Protocol. With CPRS? The design of the CPRS allows linkage CDM projects, the projects can occur in a to emission trading systems globally, with country without a GHG reduction commitment participants able to fulfil 100% of their Australian and would typically be a developing country or carbon emission reductions with CERs and emerging economy such as India, China, Chile, ERUs. This means there is great potential in Brazil, Mexico or South Africa. Australia for a product such as KMR.

However the CPRS outlined in the White Paper proposes that Australian carbon pollution permits initially cannot be exported, while allowing an unlimited amount of CERs and ERUs to be imported to offset domestic emissions. This proposed one-way trade of certificates causes limitations on free market mechanisms and until the final legislation is passed by Parliament, it remains to be seen exactly how the KMR might work within the Australian market.

 Munich Reinsurance Australasia – Oceania Topics Geo 2008 • Growth in renewable energy • Carbon Capture and Storage (CCS)

The development of renewable energy will CCS refers to the capture of carbon dioxide be critical in moving Australia towards a low that would otherwise be emitted into the carbon economy. The alternative energy sector, atmosphere by industry or in electricity which includes solar, wind and geothermal generation. This process involves injecting technologies, is expected to grow 30 times carbon dioxide deep underground or below its current size by 2050, demonstrating that the seabed, where it is sequestered for the sustained economic growth can be achieved long‑term. Given that the future of the coal while substantially reducing carbon pollution. industry in Australia may depend on it, CCS is seen as a key component of the Government’s Australia has a Mandatory Renewable Energy emissions reduction strategy. Target (MRET), with the intention to increase the renewable energy contribution to Australia’s The Garnaut Report noted that CCS is electricity supply. At present, Australia’s strategically important for Australia’s coal energy needs are met by coal, which produces exports and domestic electricity generation. around 80% of electricity while gas accounts Currently there are successful demonstration for 11% and oil for 1%. Renewables currently projects under way in Australia (for example the only account for around 8%. MRET has been Otway Project in Victoria) and it is expected that amended to ensure that the equivalent of at the process will be commercially viable in the least 20% of Australia’s electricity supply is near future. If CCS is to move beyond existing sourced from renewables by 2020. This target is demonstration projects, insurance cover will be equivalent to all residential electricity currently required across a full range of risks including consumed in Australia each year. engineering, property and casualty lines.

Investment in renewable energy is now Summary increasingly considered mainstream, with capital markets witnessing a surge in funds destined Business thinking around climate change is for clean energy investments. It is expected that starting to shift. The debate surrounding the worldwide investment will reach US$450bn per implementation of the CPRS clearly demonstrates annum by 2012 and US$600bn by 2020 (Source: that the business community is now focusing Global trends in sustainable energy investment more on the management of these risks and 2008, New Energy Finance Research, UNEP). impacts of a lower carbon economy. Whilst renewables are currently dominated by Munich Re was amongst the first in the wind power, there is growing interest in other business community to recognise the areas, such as geothermal, where Australia importance of combating climate change has resources with the potential to provide (adaptation and mitigation) and the potential up to 2,200 megawatts of base load capacity it has to adversely affect the risk landscape by 2020. Potentially, this translates to an of almost all lines of our business. investment of A$12bn and would represent up to 40% of the MRET target. Recently Munich Re entered into a five year collaborative agreement with the Centre for Munich Re continues to work with its clients Climate Change Economics and Policy of the across the globe to provide and offer traditional London School of Economics and Political engineering insurance solutions for renewables Sciences headed by Professor Lord Nicholas and innovative cover concepts for protecting Stern. The goal of this collaboration is to advance investments in low carbon technology. In the research into the economic consequences of area of renewable energy demand, for example, climate change. One focus of the research is Munich Re has been providing insurance cover on consequences of emission trading systems, for the construction and operation of off-shore the appropriate design of such schemes and wind farms since 2001 and is involved across business opportunities these might create. a full range of renewable energy technologies With products, like the Kyoto Multi Risk (solar: photovoltaic and thermal, geothermal, Policy, Munich Re supports the expansion biomass, hydro-electric, sea and tidal current). of low carbon technologies and addresses the need to provide protection from the emerging risks in this area.

Munich Reinsurance Australasia – Oceania Topics Geo 2008 5 Queensland: Not always the Sunshine State – The Floods of January and February 2008

Two major rainfall events occurred across Queensland during January and February 2008, affecting many rivers, towns and mining operations. The substantial flooding and associated damages resulted in considerable insured and economic losses. The lessons learned from these events reinforce the attention insurers and reinsurers must adhere to when underwriting valuable risks in particularly exposed areas.

Meteorological background to the events The most significant flooding, from both a and impacts on communities historical perspective and in terms of damage, was around the Nogoa, Warrego, and Belyando January 2008 Flood rivers in central Queensland. The Nogoa River The first event followed very heavy rainfall flows though the farming and mining town of between 10 and 21 of January. Major Emerald (population 9,350), where rainfall of widespread flooding occurred across central around 700mm was recorded. The Emerald Queensland, the inland coalfields and the coast flood was estimated to be about a 1 in 100 year between Townsville and Mackay. event, with the flood peaking 15.4 metres above normal levels within the town. The town and The rainfall resulted from a monsoonal low many outlying properties were isolated due to pressure system tracking a path across the inundated bridges and road closures, and more state and was associated with the remnants than 2,700 people from almost 800 houses of Tropical Cyclone Helen. As the low travelled were evacuated due to floodwater. further eastward as shown in Figure 1, it positioned itself over water to the south of Cairns and intensified.

Wetar Lombok Figure 1. Track of the tropical low pressure Bali Flores Sumbawa systems from 10 until 18 January and Tropical Low Track 9 to 13 February 2008. The solid lines Timor Sumba 10 to 18 January 2008 denote the centre of the systems. Shaded TIMOR Tropical Low Track Melville I. 9 to 13 February 2008 superimposed areas indicate total rainfall SEA Bathurst I. amount and location for the 7 days to Monsoonal Trough Darwin Gulf of 15 February 2008, 5am 20 January and the 7 days to 18 February. Car pent aria The dashed line represents the monsoonal Joseph Bowan Basin Coal Seams te Bonaparte trough at 5am on 15 February. Central Gulf 9 Feb, 10am Bonapar Total rainfall > 200mm Queensland coal seams in the Bowen Archipelago 10 Jan, 9am INDIAN Basin are indicated. Image adapted CORAL Total rainfall > 500mm from Bureau of Meteorology and OCEAN SEA Cairns Queensland Government. Total rainfall > 800mm

Broome NORTHERN TERRITORY Townsville Giru Airlie Beach Proserpine Mackay Barrow I. Dampier

QUEENSLAND Emerald Rockhampton Alice Springs Bundaberg

Fraser I. Carnarvon Charleville Dirk WESTERN AUSTRALIA Hartog I. Brisbane

18 Jan, 9pm 13 Feb, 4pm

Geraldton Laverton

NEW SOUTH WALES Kalgoorlie-Boulder Ceduna 0 500 1000 1500Maitland Kilometres u s t r alian Bight Perth Gr e a t A Newcastle Freemantle Sydney Bunbury Mildura Adelaide Wagga Wagga Wollongong Port Lincoln Archipelago of the Canberra Recherche Spencer Gulf AUSTRALIAN Albany Kangaroo6 I. Munich ReinsuranceVICTORIA Australasia – OceaniaCAPIT TopicsAL Geo 2008 Bendigo TERRITORY Ballarat Melbourne Mount Gambier Geelong

TA SM A N SEA a i t King I. Ba ss St r Flinders I. Cape Barren I. Burnie SOUTHERN Davenport Launceston Queenstown OCEAN TASMANIA Hobart Queensland Floods 2008. Water overflows from the Fairbairn Dam spillway upstream of the town of Emerald in central Queensland.

February 2008 Flood Fairbairn Dam, Queensland’s second biggest The second event occurred between 11 and 18 dam is located about 15km southwest of of February. Severe weather and intense rainfall Emerald on the Nogoa River and supplies along the central coast of Queensland affected water to the town. For the first time in many rivers and towns between Townsville almost two decades it overflowed in January and Bundaberg. In February 2008, 168 flood 2008, after reaching its 1.3 million mega litre warnings were issued for 17 river basins. capacity. During peak flood times, water levels reached 4.44 metres above normal on The rainfall originated from a low in the Gulf the spillway, resulting in the Emerald flood of Carpentaria that moved southeast. The low around 20 January. Prior to this the dam was developed in an active phase of a monsoon only at 35% capacity due to a prolonged trough and whilst it moved quickly offshore, drought. This resulted in less flooding than a strong high-pressure ridge developed and what would have occurred had the dam pushed the monsoon trough northwards as been at capacity. On the positive side, with shown in Figure 1. Moving ahead of this were the dam at full capacity the water supply for intense south-easterly winds that, with other agriculture is secure for the next two years atmospheric conditions present, resulted in and for five years for towns and mines. intense rainfalls and severe flash flooding in the area around Mackay.

During this period, nearly 70% of the state was The most significant rainfall fell in the lower placed under joint State-Commonwealth Natural Pioneer River around the township of Mackay Disaster Relief and Recovery Arrangements, (population 85,000), with over 600mm of rain and funding was made available for flood- recorded over 6 hours on 15 February. Flash affected communities, primary producers and flooding damaged around 5,000 properties small businesses. Large livestock losses were causing significant financial losses. This period reported by some farmers, with up to A$0.5m has been described as the worst flooding in 20 worth of cattle being lost on individual properties, years, resulting in the declaration of a disaster while some irrigation properties experienced situation as businesses, schools and the airport infrastructure and crop destruction totalling were closed and hundreds of homes evacuated. between A$1.5m and A$2m. Extensive damages State Emergency Services were called in to to federal and state infrastructure were reported take stranded people to safety, but two lives to be in excess of A$50m. were lost in flood related accidents.

Munich Reinsurance Australasia – Oceania Topics Geo 2008 7 The Pioneer River has a well-documented history of flooding as far back as 1884. In November What was the role of El Niño and La Niña? 2000 a flash flood event occurred, but the The El Niño – Southern Oscillation (ENSO) magnitude of rainfall experienced in 2008 had refers to a climate variability that describes not occurred in the region since record flooding the appearance of much warmer sea surface in February 1958. temperatures in the central to eastern Pacific Townsville experienced very heavy rainfall Ocean and the South American coast. This (260mm over 3 hours) early in the morning phenomenon is described by means of the on 16 February resulting in moderate to major Southern Oscillation Index. ENSO’s influence flooding in the following days. Record floods affects seasonal weather patterns. For within the Fitzroy Basin, as well as numerous example, during an El Niño the eastern half near record floods across many other coastal of Australia experiences dryer than normal catchments followed. Rainfall generally eased conditions while the reverse effect, La Niña, from that point onwards, but river flooding has the potential to increase rainfall over persisted for more than a week. The flood peak Australia and hence flooding is more likely at Rockhampton occurred on 25 February and than usual. coincided with very localised thunderstorm The extreme precipitation events in January activity that led to flash flooding and severe and February can certainly be associated property damage. Rainfall intensities for the with a well established La Niña event in flash floods in Townsville and Rockhampton can the equatorial Pacific. Historically, there be estimated at 1 in 100 year occurrences. are substantial differences in the spatial distribution of rainfall from one strong La Niña event to the other, therefore, all La Niña events should not be expected to be the same.

A submerged street sign on the corner of Riverview and Gray Streets in the town of Emerald in central Queensland, where severe flooding saw more than 2,000 people evacuated from their homes.

8 Munich Reinsurance Australasia – Oceania Topics Geo 2008 Impact on mines Preventative measures

A number of coal mines in the Bowen Basin Open cut mines unprotected by levee banks, area (Figure 1) were affected with open pits or underground operations unprotected from inundated and equipment damaged. The surface water inflow, have always attracted flooding also restricted access to the mines and particular scrutiny by insurers and reinsurers. transportation across road, rail and port facilities Good risk management practices can minimise was impacted. Surface runoff was the cause of the losses that can result from severe seasonal most mine flooding, with rainfall overwhelming conditions and by taking pro-active steps, future site drainage facilities rather than overflow of losses can be further reduced. This could include local creeks and water courses. building levees to withstand a 1 in 200 year rain event along with risk preventative measures such One of the worst affected mines was the as installing larger capacity pumps and moving Ensham open cut mine near Emerald, which mining machinery not being used out of the experienced pit flooding from torrential rain and open cut mines and above a 20 year flood level. local runoff. The river overwhelmed the mine Underground operations should have adequate flood protection system which was designed for dewatering facilities to obtain flood cover. a 1 in 100 year river flood, then flowed into the open cut mine which is over 60 metres deep. Insurance implications This resulted in a complete inundation of two of the mine’s six coal pits along with one of the The January event incurred an insured draglines being submerged about 15 metres loss of approximately A$450m, comprising due to the rapidly rising floodwater. approximately A$400m for mining and about A$50m for other general insurance (property, To recommence normal mining operations and content, motor, commercial). Whilst difficult to coal exports, it was essential to remove the quantify, the overall economic impact of the loss water from the coal pits as soon as possible. event is estimated at A$670m. The insured loss The discharge of this water from the mines into for the February event is estimated at around the surrounding creeks and rivers is regulated A$950m, made up of approximately A$650m by the Environmental Protection Agency (EPA). of mining losses and A$300m for other general Mining companies worked closely with the insurance losses. The total economic loss is EPA to facilitate the safe and environmentally estimated to exceed A$1,180m. sustainable release of pit water into the river system. Whilst the EPA in some instances Policy coverage relaxed their normal tight requirements, they Typically, property policies provide cover for continued to only allow water to be transferred damage to insured property (fixed assets and into waterways that were naturally flowing. mobile plants). Business interruption, due This caused some problems, as a number of to flooding of open pits, is usually covered river and creeks are inevitably dry for some and can be extended to include the denial of periods most years. Twelve months after the access to and from the mine site. Costs and flooding, several mine pits still contain water expenses incurred in the clean up and removal and the sites have ongoing logistical challenges, of contaminated water, soil and debris can be as they continue to remove water before covered as well. There are additional factors that they can resume excavation. Most of the 33 affect the business interruption loss, such as mines in the Bowen Basin lost significant prior events that may have contributed to the production and some were still at only 50% of loss, which are to be excluded as they are not operational capacity months after the flooding. part of the flood claim. A complicating factor Safety concerns and shortages of personnel with mining losses is the value of business due to difficulty in moving around the region interruption losses. Fluctuating commodity contributed to further reduction in production. prices, stockpiles and client orders all affect the value of business interruption losses. Queensland’s export coal industry contributes significantly to the economy and also provides Underwriting aspects A$1.15bn annually to the Queensland The majority of the losses were associated government through royalties. The industry with business interruption losses rather than is dominated by central Queensland’s Bowen material damage. Most of the claims arose from Basin mines, the source of 40% of the world’s lost production due to the flooding interfering steel making coal. It is estimated that these with normal mining operations. When a mine events resulted in costs to the export coal is inundated, other potential loss sources may industry and the state’s economy of hundreds include access to the mine site, access within of millions of dollars. the mine itself and damage to existing flood mitigation works such as levees.

Queensland Floods Insured Losses Overall economic Losses January 2008 est. A$450m est. A$670m February 2008 est. A$950m est. A$1,180m

Munich Reinsurance Australasia – Oceania Topics Geo 2008 9 A new warning system for Tonga

The new RANET system provides early warning of storms, tropical cyclones, tsunamis and other natural hazards. This gives inhabitants of the island kingdom the chance to take evasive action and to avoid or at least minimise personal injury and property damage in case of natural disasters. It has also improved the quality of Tonga’s weather forecasts.

The Kingdom of Tonga in the South Pacific the more remote islands. For safety reasons comprises 171 islands, of which some 48 are the satellite-backed system in operation at the inhabited. The island kingdom is regularly hit time had to be closed down when wind speeds by natural events and the disaster alarm has exceeded 120km/h. been raised several times. Since the beginning of the decade three major cyclones (Mona, The situation improved when a new early Waka, Heta) have hit the islands. In the last warning was introduced. At the Third International three years, 17 earthquakes with a magnitude Conference on Early Warning held in Bonn, of 6 or higher have hit the islands, a tsunami Germany, in March 2006, the Munich Re was triggered by a magnitude 7.9 earthquake Foundation presented a €50,000 award for the on 3 May 2006 and in February 2008 a severe setting up of the best tailor-made early-warning storm crossed the islands of Tonga. system. Of the 130 entries submitted from all over the world, Tonga obtained first place with In the past no reliable early warning system a project designed to link a number of strategic existed. For example, in the event of a cyclone points in Tonga to a so called RANET system there was no means of communicating with already operating in the Pacific.

Tonga is an archipelago, located in the South Pacific and comprises of 171 islands, Tafahi Niuafo’ou 48 of them inhabited, spread over 748km2. Niuatoputapu

SOUTH PACIFIC OCEAN

KINGDOM Vava’u Group TONGA Vava’u Neiafu

Pangai

Ha’apai Group

Nuku’alofa

Tongatapu Eua Group Installation completed

Installation through Govermnent of Tonga

10 Munich Reinsurance Australasia – Oceania Topics Geo 2008 Fallen goods at the central supermarket in Nuku’alofa, Tonga, after a massive magnitude 7.9 earthquake rocked the island nation in 2006.

RANET stands for “Radio and Internet for operating on the islands of Tongatapu, Vava’u the Communication of Hydro-Meteorological and Ha’apai. The Kingdom of Tonga is now linked and Climate Related Information”. It is the to the service, that also issues real-time severe product of a combined effort on the part of weather and disaster warnings. Experts on site a number of national hydro-meteorological have performed various trials and transmission services, non government organisations, and tests and are keen to press on with the task of communities. They have joined forces to provide linking more remote islands to the system. weather, water, and climate information for the remote, rural populations that are often most in RANET, which operates 24 hours a day throughout need of environmental forecasts, observations, the year, will transmit real-time warnings of and warnings. RANET has a simple mission: windstorms and thunderstorms. It will also warn to help national and regional organisations against volcanic eruptions and tsunamis, to which relay useful information, that often tends to Tonga is also prone. be confined to urban areas, to outlying rural RANET will also bring improvements for locations, thus helping to reduce disaster air traffic control by providing enhanced losses and enhance community resilience. meteorological readings as well as warnings, RANET is accordingly involved in developing and will improve the quality of meteorological new communication tools, providing training forecasts for the island kingdom. Scientific and building management capacities. It provides circles, including meteorologists and universities new “storm resistant” radio frequencies for will also benefit from the data generated by the communication and non-stop data-sharing. RANET systems. Initially the complex process of procuring The key issue for the Munich Re Foundation, materials and carrying out technical trials in however, is to improve the warning for the the humid tropical climate of the Pacific islands people at risk. led to delays in setting up the radio system. Finally, in July 2008, RANET stations began

Munich Reinsurance Australasia – Oceania Topics Geo 2008 11 Oceania natural catastrophes: Review of the year 2008

Each year, Munich Re analyses natural catastrophe events around the world. As events occur, the relevant loss information is recorded in our global natural catastrophe database, Munich Re NatCatSERVICE. In 2008, for the first time, we have produced a specific report that examines natural loss events in the Oceania region. The Oceania region registered 50 natural catastrophes in 2008. These were mostly weather related and resulted in 44 people losing their life. The economic cost associated with these events was estimated at US$2.4bn with insured losses amounting to US$1.6bn. The losses arising from these events are comparable to the losses sustained from 96 events in 2007.

The Munich Re NatCatSERVICE defines a natural Economic losses, estimated at US$2.4bn, were catastrophe as an event resulting in substantial generated in 2008 through natural catastrophes material or human loss. Catastrophes are divided in Oceania. The distribution by peril is shown in into specific categories and require various criteria Figure 3.a. The majority of losses were caused to be met. Whilst some events are identified by flood related events (76%), in particular the as being of regional significance, others will be Queensland floods of January and February (see defined as major disasters in global terms. page 6). The remainder can mostly be attributed to the series of severe thunderstorms that occurred The database distinguishes between the following around the greater Brisbane area in mid November. main types of events in Oceania: Insured losses in 2008 amounted to over US$1.6bn, with flood events accounting for 48 % Geological events and severe storms for 16% as shown in Figure 3.b. • Earthquakes This distribution by peril is similar compared to the economic losses. • Tsunamis • Volcanic activity and eruptions Figure 4 shows the number of natural disasters, classified into geological and weather related Atmospheric events perils, from 1980 to 2008. Figure 5 displays overall and insured losses for the same time • Storms (e.g. tropical cyclones, winter storms, period, adjusted to 2008 values. Despite there severe weather) being only half as many events in 2008, the • Floods (river floods, flash floods, storm surge) economic as well as insured losses are similar • Mass movements (landslides, avalanches) to 2007. This highlights the severity of individual • Bushfires, droughts, heatwaves natural catastrophes in 2008. • Cold spells, snow load A review of insured losses arising from natural catastrophes between 1980 and 2008 reveals that Disaster review of the year 2008 in the 10 years from 1999 to 2008, the industry In 2008, 50 natural disasters in Oceania were experienced insured losses of around US$6.9bn. analysed, approximately half the number that These were predominately the result of the April occurred in the record year of 2007, where 96 1999 Sydney hailstorm, a series of eastern seaboard events were noted. As shown in Figure 1, by far the coastal lows and two hailstorms (Sydney and largest proportion of events (56%) was made up of Canberra) in 2007 and the previously discussed severe storms such as localised thunderstorms and flood losses of 2008. In stark contrast, insured hailstorms, while tropical cyclones accounted for losses of around US$3.9bn were caused in the years 8% and flood related events for 28%. 1989 to 1998 by natural catastrophes, with the 1989 Newcastle earthquake being the largest single loss. Overall, 44 people died as a result of natural The years 1980 to 1988 were relatively benign with disasters during 2008. Flood and landslides insured losses of approximately US$3.2bn. accounted for almost half of the fatalities, while 23 people lost their life in storms, of which 7 can An important point to note about climate change be attributed to tropical cyclones as shown in is the effect it has on the frequency and severity Figure 2.a. Figure 2.b illustrates the distribution of of events. 2008 revealed fewer but more intense fatalities by country. New Zealand experienced the natural disaster events, and is consistent with largest proportion of fatalities (32%), while around what can be expected from a scientific perspective one quarter of all natural disaster related deaths regarding projected extreme events and climate occurred in Australia and Papua New Guinea. change for this region. Despite there being no significant increase in overall loss values in 2008, there is no reason for complacency when reviewing frequency and severity of natural disasters in the Oceania region.

12 Munich Reinsurance Australasia – Oceania Topics Geo 2008 Distribution by Peril 2008

The charts show the distribution of events, fatalities, overall losses and insured losses by peril.

4% 4%

28%

Earthquake, Volcanic activity Severe Storm Tropical Cyclone Flood, Landslide Bushfire

56% 8%

Figure 1. The chart shows the distribution of events by peril in 2008 (50 events).

4%

16% 23% 48% 36%

Australia Severe Storm New Zealand Tropical Cyclone Papua New Guinea Flood, Landslide Fiji New Caledonia

25% 32% a) b) 16%

Figure 2. The charts show the distribution of fatalities by peril (a) and country (b) in 2008 (44 fatalities).

0% 0% 16% 24%

Earthquake Earthquake Severe Storm Severe Storm Flood Flood

76% 84% a) b)

Figure 3. The charts show the distribution of US$2.4bn overall losses (a) and US$1.6bn insured losses (b) by peril in 2008.

Munich Reinsurance Australasia – Oceania Topics Geo 2008 13 Number of Events by Peril 1980 – 2008

Number of Events

100

80

60

40

20

1980 1985 1990 1995 2000 2005

Figure 4. The chart shows the number of natural disasters classified Extreme Temperature, Bushfire into geological events and three weather related categories. In 2008, Flood, Landslide Munich Re NatCatSERVICE noted 50 natural disasters in Oceania. Severe Storm, Tropical Cyclone By way of comparison: around 35 events were noted in the 1980s, Earthquake, Tsunami, Volcanic Activity 45 in the 1990s and 65 in 2000 – 2008.

Annual losses 1980 – 2008

US$bn (in 2008 values)

7

6

5

4

3

2

1

0 1980 1985 1990 1995 2000 2005

Figure 5. The chart presents overall and insured losses, that are adjusted to 2008 Overall Losses values. The peak in 1982 is mainly due to severe droughts with major losses to Insured Losses agriculture, while the Queensland flood and Bushfires in Victoria and South Australia caused significant economic losses in 1983.

1 Munich Reinsurance Australasia – Oceania Topics Geo 2008 Oceanic natural catastrophes 2008

Earthquake 15 Volcanic Eruption Flood / Landslide 7 Tropical Cyclone Severe Storm Bushfire

50 Natural Hazard Events 1 15 Selected Events

4 10 3 5

14 6 2

9

Extreme Temperature, Bushfire Flood, Landslide 8 13 Severe Storm, Tropical Cyclone 12 Earthquake, Tsunami, Volcanic Activity 11

Significant events 2008 Oceania

As at February 2009

No Date Loss event Region Fatalities Currency Overall Insured Exchange losses losses Factor via (million) (million) ¤ to US$* 1 4−5.1 Cyclone Helen Australia: Northern Territory 2 5−8.1 Floods, severe storms Australia: New South Wales, A$ 100 15 1.121 Queensland 3 10–21.1 Floods Australia: Queensland A$ 670 450 1.121 4 28−29.1 Cyclone Gene Fiji 7 5 11−18.2 Floods Australia: Queensland 2 A$ 1,200 950 1.069 6 12−17.2 Bushfires Australia: Western Australia 7 8−9.3 Severe storms Papua New Guinea 1 8 2.4 Severe storms Australia: Victoria, Tasmania 4 A$ 21 12 1.061 9 15.4 Flash floods, severe storms New Zealand 7 10 9.6 Tornado Australia: Queensland 11 5.7 Snowstorm New Zealand 12 22−31.7 Severe storms, floods New Zealand 6 NZ$ 116 72 1.366 13 25.8 Earthquake New Zealand NZ$ 7 0.2 1.422 14 16–20.11 Severe storms, floods Australia: Queensland 2 A$ 500 370 1.536 15 4.12 Landslide Papua New Guinea 10 Overall Losses Insured Losses *At the end of the month of occurrence.

Munich Reinsurance Australasia – Oceania Topics Geo 2008 15 Notable Oceania Events in 2008

April flash floods and severe storms: New Zealand July severe storms and floods: New Zealand

On 15 April, storms affected many areas in Auckland, July 2008 saw the highest number of storm related claims Northland and across the North Island causing damage for a single month in New Zealand. The first event, from to houses and vehicles and flooding of roads. Boats 22 to 31 of July, affected nearly all parts of the North Island were torn from moorings, trees downed and schools had costing about NZ$48m with NZ$27m insured losses. to close or were evacuated. 4 people were injured and Severe winds, tornadoes, heavy rain and flooding caused a man was killed when he was struck by lightning. On extensive damage. 68 houses were damaged, 600 flooded the same day, in the Mangetepopo Gorge in Tongariro and 70,000 were without electricity. 6 people died, 42 National Park, a flash flood killed 6 students and their people were injured, and hundreds were evacuated. The teacher whilst canyoning. The floodwaters raised the river second storm from 28 to 31 of July caused damage to level 36-fold in half an hour. the lower South Island with overall losses of NZ$68m and insured losses of NZ$46m. Severe storms affected large parts of the North Island in July 2008. Similar conditions were seen the previous year (July 2007), where storm events affected Northland, Auckland, Coromandel and Hawkes Bay causing insured losses of NZ$61m.

August earthquake: New Zealand November severe storms and floods: Australia

A shallow and moderately strong earthquake struck The greater Brisbane area experienced localised near Hastings in Hawke’s Bay on the North Island on thunderstorms in November 2008, causing substantial 25 August. The magnitude 5.9 earthquake was located damage during 16 to 20 of November with wind gusts 10km southwest of Hastings (50km from Napier) at a up to 130km/h, heavy rain (250mm/7h), large hail (up to depth of 30km. An aftershock of magnitude 3.5, slightly 4.5cm in diameter), flash floods, landslides and lightning. deeper at 40km, struck 10 minutes after the main quake. Over 4,000 homes were damaged or destroyed and Overall losses of NZ$7.1m were caused, while insured about 230,000 homes and businesses were without losses from property damage (windows, chimneys) electricity. Rivers burst their banks and vehicles were amounted to NZ$0.7m from around 300 claims. swept away while highways and rail tracks were blocked. The damage was moderate and claims were smaller Overall losses from this series of thunderstorms caused compared to the Gisborne earthquake on 20 December an estimated A$500m, of which A$370m was insured. 2007 (magnitude 6.8), which caused insured losses of NZ$30.5m. The above photo refers to this earthquake, which dislodged a sea of books at Gisborne Library.

16 Munich Reinsurance Australasia – Oceania Topics Geo 2008 Pictures of the year 2008

4 - 5 January 5 - 8 January 10 - 21 January and 11 - 18 February Tropical Cyclone Helen: Australia: Floods, severe storms: Australia: Floods: Australia: Queensland Northern Territory New South Wales, Queensland Overall losses: A$1,850m Overall losses: A$101m Insured losses: A$1,400m Insured losses: A$15m

28 - 29 January February to May 12 - 17 February Tropical Cyclone Gene: Fiji Volcanic activity Mt Tavurvur: Papua Bushfires: Australia: Western Australia Fatalities: 7 New Guinea

9 June 5 July 4 December Tornado: Australia: Queensland Snowstorm: New Zealand: Landslide: Papua New Guinea South Island Missing: 40; Fatalities: 10

Munich Reinsurance Australasia – Oceania Topics Geo 2008 17 © 2009 Picture credits Münchener Rückversicherungs-Gesellschaft Inside front cover: Smoke Stacks and Trees – Jupiter Images Königinstrasse 107 p.3. Great Barrier Reef – Fairfax Photos 80802 München p.7. Queensland Floods – Fairfax Photos Germany p.8. Fairbairn Dam Overflow – Fairfax Photos Tel.: +49 (89) 38 91-0 p.11. Tonga Earthquake – AAP Image Fax.: +49 (89) 39 90 56 p.16. Flash Floods and Severe Storms: New Zealand – APN http://www.munichre.com p.16. Earthquake: New Zealand – Photo courtesy Gisborne Herald p.16. Severe Storms and Floods: Australia – Fairfax Photos Munich Reinsurance Company p.17. Cyclone Helen – ABC Australian Branch p.17. Floods, Severe Storms: NSW and Queensland – Fairfax Photos Munich Re House p.17. Cyclone Gene: Fiji – Photo courtesy Department of Information, Fiji 143 Macquarie Street p.17. Volcanic Activity: PNG – Photo courtesy Dr. Leslie Yamat-Arellano Sydney NSW 1215 p.17. Bushfires: Western Australia – Getty Images Australia p.17. Tornado: Queensland – ABC Tel.: +612 9272 8000 p.17. Snow Storm: New Zealand – Dominion Post Fax: +612 9251 2516 p.17. Landslide: PNG – Photo Michael Thirnbeck

Munich Reinsurance Company New Zealand Branch Level 30 23-29 Albert Street Auckland New Zealand Tel.: +649 303 4628 Tel.: +649 379 5019

Climate and climate change

Extreme weather-related events and the resulting losses continue to increase. The year 2008 was marked by tempera- ture extremes, record ­precipitation, and one of the highest levels of ­tornado activity ever ­registered in the United States.

The Arctic sea ice extent in 2008 was the second lowest on record. For the first time ever, the Northwest and Northeast Passages were navigable simultaneously. The photo shows blocks of iceberg falling into the sea. Data, facts, background

The World Meteorological Organisation (WMO) the cool-neutral range of the El Niño-La Niña classifies 2008 as the tenth warmest year since oscillation beyond mid-year. The mean global recordings began in 1850. Ten of the warmest years temperature in 2008 deviates negatively from the in the statistical series have occurred in the last temperature level of past years – particularly due to twelve years. La Niña. In the north, however, large parts of Scan- dinavia recorded their warmest ever winter in The global mean surface air temperature in 2008 2007/08, with temperature anomalies of more than was 0.31°C above the average of the period 1961– +7ºC in some places. The winter was also excep- 1990, in which the value was 14.00°C (Hadley tionally warm in northwestern Siberia. Centre). The La Niña phase that lasted from Sep- tember 2007 to May 2008 had a cooling influence in the equatorial Pacific. This region remained in

Regional deviations(with of mean res ectannual to a temperature 1961 1990 in base 2008 from erio the 1961–1990 mean

Positive temperature anomalies are shown as red dots, negative anomalies as blue dots, their size reflecting the degree of vari- ation. There is a distinctive warming trend. Strong positive temperature anomalies in the northern latitudes are clear to see, particularly in Eurasia.

Source: National Climatic Data Center/ NESDIS/NOAA.

–5°C5C –4°C-4C –3°C3C –2°C2C –1°C1C 0C0°C 1°CC 2C2°C 3C3°C 4C4°C 5C5°C

Munich Re Topics Geo 2008 31 Climate and climate change

Melting of Arctic sea ice Data and facts on the climate in 2008

The high temperatures in Arctic latitudes in associ- Global temperature extremes ation with changes in atmospheric current patterns There were heatwaves in such regions as Australia, resulted in a minimum Arctic sea ice extent of 4.7 southeastern Europe, and Argentina. A drought in million km² in September 2008, thus almost reach- the southeast of Australia caused substantial crop ing the previous year’s record of 4.3 million km². losses in the Murray-Darling Basin, a major agricul- On account of the heavy thaw, the Arctic Northeast tural region. A prolonged dry spell in California was and Northwest Passages were – for the first time one of the causes of devastating wildland fires. It is ever – simultaneously navigable. The 6,500-km probable that the gradual spread of aridity in the Northeast Passage, which leads along the coast southwest of North America is already linked to of Siberia, makes the journey between Hamburg anthropogenic climate change. Parts of Argentina, and Japan 40% shorter than the route leading Paraguay, and Uruguay suffered their worst through the Suez Canal. If the Northeast and droughts in five centuries, resulting in severe Northwest Passages were to be used more fre- losses in the agricultural sector. Southern China, quently in the coming decades, it would be neces- on the other hand, experienced an extreme cold sary to establish new ports and facilities for spell in January, with snowfalls and ice formation processing raw materials along the coasts of producing major losses. Siberia and Canada respectively. More exploration and exploitation of resources in the Arctic region Record rainfalls would increase the demand for technological infra- Particularly heavy rain was recorded in the mon- structure along the neighbouring coasts. Along the soon regions of South and Southeast Asia. Thou- Arctic sea routes and in the coastal areas, new risks sands of people were killed in India, Pakistan, and would emerge in connection with the construction Vietnam, whilst more than ten thousand were of facilities and transportation. made homeless. More than 300,000 were affected by heavy rain and floods in the West African mon- soon. In the United States, extreme precipitation brought heavy flooding to the Midwest. In the last ten days of November, extreme rainfall in Southern Brazil caused floods and landslides – with more than 1.5 million people affected and about 80,000 made homeless. Europe, particularly southern and central France, had to cope with floods from late October until early November. During this time, some places recorded 500 mm of rain.

Regional deviations(wit of mean sp annual t to 1961 precipitation 199 base in 2008perio from the 1961–1990 mean i

Green dots represent positive anomalies, orange dots negative anomalies, their size reflecting the degree of variation. Positive anomalies are very prominent in South and Southeast Asia as well as in the north of South America. There are precipita- tion deficits in the Mediterranean area, southern Australia, and parts of South America.

Source: National Climatic Data Center/ NESDIS/NOAA.

–500 –400 –300 –200 –100 0 100 200 300 400 500 in mm

32 Munich Re Topics Geo 2008 During the winter of 2007/08, Canada had to con- Conclusion tend with extreme volumes of snow, reaching Observations made in the year 2008 confirm the depths of 5.5 m in some places (Quebec) and caus- persisting trend of anthropogenic warming. As in ing the roofs of many houses to collapse. At the the previous year, the striking decline in the Arctic same time, the meagre extent of the northern sea ice extent provided clear evidence of increased ­hemisphere snow cover in the spring of 2008 – with warming in the higher latitudes. Of particular rele- a negative anomaly of more than 7 million km² in vance for the insurance industry were the extreme respect of the average of the last 40 years – con- weather events that occurred in the year 2008, firmed the long-term negative trend. including heavy rain, windstorms, and severe local storms. Tornado records The United States registered a period of tornado activity that was one of the most intense since the first reliable records began in 1953. Almost 1,500 tornadoes swept over the country between Jan- uary and August 2008, an absolute record in tor- nado activity for this time of year. For the year as a whole, the number of confirmed tornado events will probably be some 1,700, which is much higher than the average of the last ten years, 1,270, and just below the previous record of 1,817 set in 2004.

Anomalous activity characteristics observed in a single season cannot in themselves be attributed to climate change. On the other hand, a recent cli- mate model study (Trapp, R.J. et al., 2009, GRL36) shows that during the simulation period 1950– 2099, with greenhouse gas concentrations increas- ing in the United States, there are likely to be more and more days in the year on which there is a potential for severe thunderstorms with wind gusts, hail, heavy rain, and tornadoes.

Annual development of Arctic sea ice extent

Million km² This graph presents a comparison of the Arctic sea ice extent in the years 2005, 2007, and 2008, and the annual mean in 1979–2000. The strong decrease in the 12 ­minimum over time is plain to see.

2008 2007 10 2005 1979–2000 mean

Source: National Snow and Ice Data Center 8

6

4 June July August September October

Munich Re Topics Geo 2008 33 NatCatSERVICE

With more than 26,000 entries, Munich Re’s NatCatSERVICE database is one of the world’s most comprehensive sources of information on natural ­catastrophes. It is supplemented every year by about 800 new events which are analysed and documented.

The latest analyses, charts, and ­statistics are available for down- loading free of charge at our website www.munichre.com/geo. The year in figures Overall losses and insured losses 750 events 12% 12% On the basis of figures adjusted for inflation, 2008 was the third most expensive year on record. Overall Tropical cyclones and the earthquake losses came to US$ 200bn, a figure in Sichuan (China) made 2008 one of exceeded only in the hurricane year the most devastating years on of 2005 and in 1995, the year of the 37% record. Overall losses from 750 nat- Kobe earthquake in Japan. 39% ural catastrophes came to US$ 200bn (2007: US$ 82bn). Insured losses The most expensive catastrophe in Percentage distribution totalled US$ 45bn (2007: US$ 30bn). macroeconomic terms was the earth- worldwide quake in Sichuan, with direct losses Number of events of at least US$ 85bn. The costliest 163,000 fatalities* windstorm was Hurricane Ike, which 1% The percentage breakdown of events in September devastated parts of the 3% into the various types of natural haz- Caribbean and caused severe dam- ard was in line with the long-term age in the US states of Texas and average. In 2008, we analysed and Louisiana. Overall losses came to documented 750 loss events, includ- US$ 38bn. 43% ing 78 earthquakes, 10 volcanic erup- tions, 282 windstorms, and 292 Insured losses totalled US$ 45bn. The 53% floods and landslides. A further 88 costliest event was Hurricane Ike, loss events were caused by heat- which caused losses in the US$ 15bn Percentage distribution waves, droughts, forest and wildland range, making it the third most worldwide fires, and frost or winter damage. expensive hurricane in US history, surpassed only by Hurricane Katrina Overall losses: Fatalities in 2005 with losses topping US$ 66bn US$ 200bn and Andrew with losses at US$ 30bn 12% At least 163,000 people died as a (both in current values). result of natural catastrophes in 2008. 9% More than 85,000 people were killed In Europe, the costliest natural catas- alone by Cyclone Nargis, which trophe was Emma, a winter storm 43% crossed Myanmar at the beginning of that crossed large parts of Europe at May. 54,000 people are still missing, the beginning of March with wind whilst over a million were made speeds of over 150 km/h, causing 36% homeless. A strong earthquake in the insured losses of US$ 1.5bn and over- Percentage distribution Chinese province of Sichuan – also in all losses of US$ 2bn. worldwide May – claimed the lives of at least * Not including missing persons: 70,000 according to the authorities, Insured losses: Cyclone Nargis: 54,000 and a further 18,000 are still missing. US$ 45bn Sichuan earthquake: 18,000 5% 1% 6%

88%

Percentage distribution worldwide

Number of natural catastrophes 1980–2008

1,000 Geophysical events Earthquake, volcanic eruption

800 Meteorological events Tropical storm, winter storm, severe weather, hail, tornado, 600 local storm

Hydrological events Storm surge, river flood, 400 flash flood, mass movement (landslide) 200 Climatological events Freeze, wildland fire, drought 0 1980 1984 1988 1992 1996 2000 2004 2008 Trend

Munich Re Topics Geo 2008 35 NatCatSERVICE

Pictures of the year

10 January–13 February 14–31 January 27 February Winter damage: China Floods: Australia Earthquake: United Kingdom Overall losses: US$ 21,000m Overall losses: US$ 600m Overall losses: US$ 40m Insured losses: US$ 1,200m Insured losses: US$ 450m Insured losses: US$ 30m Fatalities: 129

1–2 March 28 April 2–5 May Winter Storm Emma: Europe Severe storm, tornadoes: USA Cyclone Nargis: Myanmar Overall losses: US$ 2,000m Overall losses: US$ 110m Overall losses: US$ 4,000m Insured losses: US$ 1,500m Insured losses: US$ 80m Fatalities: 85,000 Fatalities: 14 Missing: 54,000

12 May June 22 July–7 August Earthquake: China Floods: USA Floods: Ukraine, Moldova, Romania Overall losses: US$ 85,000m Overall losses: US$ 10,000m Overall losses: US$ 800m Insured losses: US$ 300m Insured losses: US$ 500m Fatalities: 38 Fatalities: 70,000 Fatalities: 24 Missing: 18,000

36 Munich Re Topics Geo 2008 19–22 August 18 August–11 September 21 August–3 September Tropical Storm Nuri: Hong Kong, Floods: India, Nepal, Bangladesh Hurricane Gustav: USA, Caribbean China, Philippines Overall losses: US$ 240m Overall losses: US$ 10,000m Overall losses: US$ 40m Fatalities: 635 Insured losses: US$ 3,500m Fatalities: 8 Fatalities: 139

6 September 7–14 September 12 October–24 November Rockslide: Egypt Hurricane Ike: USA, Caribbean Wildfires: USA Fatalities: 101 Overall losses: US$ 38,000m Overall losses: US$ 2,000m Insured losses: US$ 15,000m Insured losses: US$ 600m Fatalities: 168 Fatalities: 2

28–29 October October–December 1–15 December Earthquake: Pakistan Floods: Brazil Floods: Italy Overall losses: US$ 10m Overall losses: US$ 750m Overall losses: US$ 160m Fatalities: 300 Insured losses: US$ 470m Fatalities: 8 Fatalities: 131

Munich Re Topics Geo 2008 37 NatCatSERVICE

Great natural catastrophes 1950–2008

In the year 2008, there were 750 loss – Monsoon floods in August and Sep- Four catastrophes complied with this occurrences, compared with 960 in tember in India, Bangladesh, and definition in 2008: the winter damage the previous year. When classified by Nepal with thousands of fatalities. in China in January and February, the catastrophe category, however, the earthquake in Sichuan (China) on drop is noticeable only in the minor – Typhoon Fengshen, which caused 12 May, Cyclone Nargis, which hit events in categories 1 and 2. In cat- widespread devastation particularly Myanmar in May; and Hurricane Ike, egories 3 and 4 (severe and major in the Philippines. The toll: over which caused havoc in the Caribbean catastrophes), the number of occur- 300,000 damaged or destroyed and the United States. More than rences was more or less the same in buildings, more than 550 fatalities, 150,000 people lost their lives in these both years. A completely different overall losses amounting to four great natural catastrophes. Over- picture is presented by Category 5, US$ 220m. all losses came to US$ 148bn, of which relates to devastating catas- which some US$ 17bn was insured. trophes with overall losses exceeding Great natural catastrophes – US$ 500m in today’s values and more Category 6 Outlook than 500 fatalities. Here, a constant upward trend is clearly discernible. The number and effects of great nat- The long-term analysis of great nat- In 2008, there were 41 such catas- ural catastrophes in Category 6 serve ural catastrophes confirms a rising trophes – the highest number ever as important criteria for long-term loss trend. The reasons for this are, to recorded in this category. analyses. In line with United Nations a large extent, socio-economic devel- definitions, natural catastrophes are opments, such as increasing concen- These included classified as great if the affected trations of values, rising population region’s ability to help itself is clearly figures, and the settlement and – Hurricane Gustav, which swept over overstretched and supraregional or industrialisation of exposed areas. the Caribbean towards the United international assistance is required. Climate change and the increase in States, claiming hundreds of lives As a rule, this is the case when there major weather-related natural catas- in Cuba, Haiti, and the Dominican are thousands of fatalities, when hun- trophes that is to be expected as a Republic. Gustav caused overall dreds of thousands of people are left result are not to be neglected as an losses totalling more than homeless, and/or when overall losses essential driver of this loss develop- US$ 10bn. – considering the economic circum- ment in the future. stances of the country concerned – and/or insured losses are of excep- tional proportions.

Number of devastating natural catastrophes (Category 5) 1980–2008

40 Category 1 Small-scale loss event 1–9 deaths and/or minor and 35 small-scale damage Category 2 Moderate loss event 30 10–19 deaths and/or damage to 25 buildings and other property damage Category 3 Severe catastrophe 20 More than 20 deaths and/or overall loss of more than US$ 50m 15 Category 4 Major catastrophe More than 100 deaths and/or overall 10 loss of more than US$ 200m Category 5 Devastating catastrophe 5 More than 500 deaths and/or overall loss of more than US$ 500m 0 Category 6 Great natural catastrophe 1980 1984 1988 1992 1996 2000 2004 2008 (cf. above definition)

38 Munich Re Topics Geo 2008 Number of great natural catastrophes, 1950–2008 The chart shows for each year the number of great natural catastrophes (Category 6), divided up by type of event.

Number of events

14

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8

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4

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0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Geophysical events Hydrological events Trend Earthquake, volcanic eruption Storm surge, river flood, flash flood, mass movement (landslide) Meteorological events Tropical storm, winter storm, Climatological events severe weather, hail, ­tornado, Heatwave, freeze, wildland fire, local storm drought

Overall losses and insured losses from great natural catastrophes, 1950–2008 The chart presents the overall losses and insured losses – adjusted to present values. The trend curves verify the increase in Category 6 catastrophe losses since 1950.

US$ bn

180

160

140

120

100

80

60

40

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0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Overall losses (2008 values) Trend: overall losses

Of which insured losses (2008 values) Trend: insured losses

Munich Re Topics Geo 2008 39 news + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + + +

Insurance sector think tank – Corporate agreements will generate valuable expertise

Environment and market conditions are changing at breathtaking speed. Demand for innovative concepts to cover complex risks is constantly increas- ing. We are enhancing our expertise in the field of natural hazards and climate change impacts by engaging with first-class partners, thus laying the founda- tions for innovative solutions and products.

Munich Re, founding corporate partner of the Centre for Climate Change Eco- nomics and Policy at the London School of Economics (LSE) Since October 2008, Munich Re has been collaborating with the renowned London School of Economics and Political Science. Munich Re is a founding corporate partner of the Centre for Climate Change Economics and Policy, chaired by Professor Lord Nicholas Stern within the new Grantham Research Institute. Our ambitious objective is to quantify and assess the economic impact of climate change, together with the new technologies and market mechanisms, e.g. emissions trading, developed in response to it. The agree- ment has been concluded for an initial period of five years. Munich Re’s five projects will analyse issues such as the impact of climate change on economic development in the BRIC states (Brazil, Russia, India, and China), how best to organise the emissions trading system, and what business potential can be derived from it. The results will be fed into Munich Re’s strategic business plan- ning to improve risk management and develop new climate change business segments.

Risk research in collaboration with Risk Management Solutions (RMS) Risk markets are in a constant state of flux. Consequently, risk modelling, especially accumulation risk modelling, faces many challenges. Munich Re has entered into a long-term agreement with Risk Management Solutions (RMS) that involves identifying and researching new, difficult risk complexes. Founded in 1988, RMS is now the leading provider of products, services, and expertise in the field of catastrophe risk quantification and management. We have concluded this non-exclusive cooperation agreement in order to increase accumulation risk transparency, identify the drivers of modelling uncertainties, optimise risk management, and support the development of innovative risk transfer solutions for clients.

Global Earthquake Model (GEM) – New standard for calculating and communicating earthquake risks Currently, there is no standard earthquake exposure model. The Global Earth- quake Model (GEM) is about to change this. Initiated by the OECD’s Global Science Forum, the project will pool the expertise of hundreds of well-known earthquake experts worldwide. It will last for five years. The aim is to establish the Global Earthquake Model as an independent standard that will improve earthquake risk calculations, promote risk awareness, and thus improve loss prevention particularly in the less-developed regions. In the medium term, we believe the work will have a positive effect on insurability of the earthquake peril throughout the world. GEM is an open-source model, i.e. the data and results will be available not just to the scientific community but also to the commercial sector, and any other interested parties.

40 Munich Re Topics Geo 2008 + + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + + Geo n

Globe of Natural Hazards – The interactive reference work for risk communication

When Munich Re’s geoscientists first published the World Map of Natural Hazards in 1978, they laid the foundations for what was to become a standard reference work for the identification and risk management of natural hazards. Now, at the beginning of 2009, the fourth version of the work has appeared as a wall map, a fold-up map, and in digital form. Since publishing the CD-ROM version, World of Natural Hazards, in 2000, Munich Re has made 80,000 copies available to clients, media representatives, and the public.

What is new in the 2009 version?

The latest version, Globe of Natural Hazards, opens a new av- enue in risk communication. The global natural hazard maps are presented on this multimedia DVD against the background of a satellite image globe. New features include the representation of the hazard complexes of hailstorms, tornadoes, winter storms, and coastal hazards. Flood risk is visualised for the first time in selected countries, which has not been possible before due to its enormous complexity. For easier orientation, the user can zoom in on any point in the world or search in a comprehensive data- base with more than 800,000 locations and cities.

Natural hazards and climate The incorporation of the topic areas of climate change and El Niño/La Niña is another completely new feature, with various ­climate change maps (precipitation, temperature, heatwaves, droughts) and climate projections integrated for the first time in the globe mode. Knowledge points also indicate the regions of the world in which the risk situation is likely to change in the future.

Interlinked and geocoded knowledge The DVD contains other knowledge components besides clima- tological information. Under the heading “Local knowledge”, it offers a wealth of detail on megacities and other informative topics, ranging from population development to technological risks (e.g. buildings and renewable energy sources). This is an area in which the principle of interlinked knowledge based on geographical-spatial structures can be applied very effectively.

Munich Re’s historical Catalogue of Natural Catastrophes (basis: NatCatSERVICE) is linked to the natural hazard and climate maps in this way, too. After a country and period have been selected, the interactive catalogue shows the distribution of historical events and provides information on the associated losses. In the case of exceptional catastrophes, further details are provided by special printable reports.

Munich Re Topics Geo 2008 41 eo news + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + +

Power function: Hazard Pointer The Hazard Pointer is a special feature that makes it possible to identify the hazard potential at any place on earth with a single click. The systematic classification of the risk provides an ob- jective picture of the hazard. The readable presentation of the results enables the user to make a quick and simple comparison of the exposures at different locations and can be printed in the form of a report. Natural hazards and climatic effects can be assessed jointly for the first time.

More modules – More knowledge The important background information in the modules Country Profile, Geo Knowledge, Glossary, and Scales make the Globe of Natural Hazards an all-round risk management tool. The Country Profile provides a quick impression of each country, with a list of natural hazards to which it is exposed, information on its geography, together with facts and figures on its administration, population, transportation, and trade and industry. The extensive Geo Knowledge module presents important basic knowledge on all natural hazards and climate change and discusses their inter- action with the insurance industry. Numerous diagrams, video clips, and animated sequences supplement the textual content and help non-experts to quickly assimilate complex subject mat- ter. The meaning of specialist terms that are unfamiliar to the user can be found in the Glossary. The various hazard levels in use internationally are listed in the Scales module, which also explains in graphical manner the impact of the various magni- tudes and intensities of events.

Risk transparency Earth’s exposure to extreme natural hazards will continue to increase. The interactive Globe of Natural Hazards is a powerful tool for natural hazard risk management – because only with the help of reliable and readily comprehensible information will it be possible to deal effectively with the challenges of the future.

Munich Re offers the following products, which can

be ordered from the publications portal on our website

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42 Munich Re Topics Geo 2008 © 2009 Picture credits Münchener Rückversicherungs-Gesellschaft Cover: AP Photo/U.S. Geological Survey Königinstrasse 107 Inside front cover: 80802 München AP Photo/U.S. Geological Survey Germany pp. 2/3: Munich Re America, M. Bove Tel.: +49 (89) 38 91-0 p. 7: Munich Re America, M. Bove Fax: +49 (89) 39 90 56 p. 8: AP Photo/File http://www.munichre.com p. 9: Munich Re America, T. Thumerer p. 12: picture-alliance/dpa/David de la Paz Supervisory Board pp. 14/15: picture-alliance/dpa/ Dr. jur. Hans-Jürgen Schinzler (Chairman), Imaginechina Guo Liliang Herbert Bach (Deputy Chairman), p. 21 (1): NASA/GSFC, MODIS Rapid Response Hans-Georg Appel, Holger Emmert, p. 21 (2): NASA/GSFC, MODIS Rapid Response Ulrich Hartmann, Dr. rer. nat. Rainer Janßen, p. 25: Rudolf Schikora Prof. Dr. rer. nat. Henning Kagermann, p. 26: Andy Offenderlein Prof. Dr. rer. nat. Drs. h. c. mult. Hubert Markl, pp. 28/29: picture-alliance/dpa/Bryan and Wolfgang Mayrhuber, Kerstin Michl, Cherry Alexander Prof. Karel Van Miert, Ingrid Müller, p. 36 (1): Getty Images, Bradley Kanaris/Stringer Prof. Dr. jur. Dr.-Ing. E. h. Heinrich v. Pierer, p. 36 (2): Reuters/China Daily Dr. e. h. Dipl.-Ing. Bernd Pischetsrieder, p. 36 (3): Reuters/Nigel Roddis Dr. rer. nat. Jürgen Schimetschek, p. 36 (4): Reuters/Alexander Ahrer Dr. jur. Dr. h. c. Albrecht Schmidt, p. 36 (5): Getty Images/Alex Wong/Staff Dr. phil. Ron Sommer, Wolfgang Stögbauer, p. 36 (6): AP Photo/Mandalay Gazette, HO Josef Süßl, Judy Võ p. 36 (7): Reuters/Niv Alias p. 36 (8): AP Photo/Hannah van Zutphen-Kann p. 36 (9): Getty Images/isifa/Maria Zarnayova Responsible for content p. 37 (1): Reuters/Bobby Yip ­Geo Risks Research (GEO/CCC 1) p. 37 (2): Reuters/Nepal Army 11 Brigade p. 37 (3): AP Photo/Ismael Francisco, Contact Prensa Latina Angelika Wirtz p. 37 (4): AP Photo/Ben Curtis Tel.: +49 (89) 38 91-34 53 p. 37 (5): Getty Images/Mark Wilson Fax: +49 (89) 38 91-7 34 53 p. 37 (6): AP Photo/Dan Steinberg E-mail: [email protected] p. 37 (7): Getty Images/AFP/AAMIB/Qureshi p. 37 (8): Reuters/SECOM/Neiva Daltrozo/ Order numbers Handout (Brazil) German 302-06021 p. 37 (9): Getty Images/AFP/Stringer English 302-06022 French 302-06023 Spanish 302-06024 Italian 302-06025

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World Map of Natural Hazards

Earthquakes Tropical cyclones Volcanoes Peak wind speeds* Zone 0: MM V and below Last eruption before 1800 AD Zone 1: MM VI Zone 0: 76–141 km/h Last eruption after 1800 AD Zone 2: MM VII Zone 1: 142–184 km/h Particularly hazardous volcanoes Zone 3: MM VIII Zone 2: 185–212 km/h Zone 4: MM IX and above Zone 3: 213–251 km/h Zone 4: 252–299 km/h Tsunamis and storm surges Probable maximum intensity Zone 5: ≥ 300 km/h (MM: Modified Mercalli scale) with Tsunami hazard an exceedance probability of 10% * Probable maximum intensity (seismic sea-wave) in 50 years (equivalent to a return with an exceedance probability Storm surge hazard period of 475 years) for medium of 10% in 10 years (equivalent to Tsunami and storm surge hazard subsoil conditions. a return period of 100 years).

Iceberg drifts Large city with “Mexico City effect” Typical track directions Extent of observed iceberg drifts + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + + Geo news + + +

Climate impacts Cities

Main impacts of climate change already Threat of sea level rise Denver > 1 million inhabitants observed and/or expected to increase San Juan 100,000 to Permafrost thaw in the future 1 million inhabitants Improved agricultural conditions Maun < 100,000 inhabitants Change in tropical cyclone activity Unfavourable agricultural Berlin Capital city Melbourne Munich Re office Intensification of extratropical conditions storms Increase in heavy rain Data resources Increase in heatwaves Bathymetry: Amante, C. and B. W. Eakins, ETOPO1 1 Arc- Political borders Minute Global Relief Model: Procedures, Data Sources and Increase in droughts Analysis, National Geophysical Data Center, NESDIS, NOAA, State border U.S. Department of Commerce, Boulder, CO, August 2008. State border controversial ­Extratropical storms: KNMI (Royal Netherlands Meteorologi- cal Institute). Lightning strokes: NASA LIS/OTD Science Team, (political borders not NASA/MSFC/GHRC. Temperature/Precipitation 1978–2007: ­binding) ­Climatic Research Unit, University of East Anglia, ­Norwich. Topics Geo World map of natural catastrophes 2008

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750 natural hazard losses Great natural catastrophes 2008

50 significant loss events (selection) No. Date Region Loss event Fatalities Overall losses Insured losses (US$ m) (US$ m) 4 great natural catastrophes 3 10.1−13.2 China Winter damage 129 21,000 1,200 17 2.−5.5 Myanmar Cyclone Nargis 85,000 4,000 Geophysical events: Earthquake, volcanic eruption 18 12.5 China Earthquake 70,000 85,000 300 Meteorological events: Tropical storm, winter storm, 39 7−14.9 Caribbean.USA Hurricane Ike 168 38,000 15,000 severe weather, hail, tornado, local storm Hydrological events: Storm surge, river flood, flash flood, mass movement (landslide) Climatological events: Freeze, wildland fire, drought Topics Geo Significant natural catastrophes in 2008

No. Date Loss event Region Fatal- Overall Insured Explanations, descriptions ities losses losses US$ m US$ m 1 4–9.1 Winter storm USA: esp. CA, MI 12 1,000 745 Wind speeds up to 175 km/h, tornadoes, heavy rain, hail. Thousands of houses, vehicles and businesses damaged. 2 7–9.1 Severe storm, flash floods Canada 80 50 Wind speeds up to 100 km/h. Houses, vehicles damaged. 3 10.1–13.2 Winter damage China 129 21,000 1,200 485,000 houses damaged/destroyed. 2,100 greenhouses collapsed. Severe losses to agriculture, 118,600 km² of crops affected/damaged. 4 14–31.1 Floods Australia 600 450 Heavy monsoon rains, flash floods. Hundreds of houses flooded/damaged. Crops destroyed, livestock killed. Losses to mines. 5 Jan–Feb Winter damage Vietnam 36 Severe losses to agriculture. 1,500 km² of rice fields destroyed. 60,000 cattle killed. 6 Jan–Feb Cyclone Fame Mozambique 20 100 Torrential rain. Rivers burst their banks. Houses flooded. Losses to agriculture. 7 Jan–Feb Cold wave, avalanches Afghanistan, Kyrgyzstan 1,000 Heavy snowfall. >800 houses destroyed. 150,000 head of livestock killed. 8 3–4.2 Earthquake DR of Congo 7 7 Mw 5.9. 3,400 houses, public buildings damaged. 9 5–6.2 Tornadoes, severe storm USA: esp. KY, TN 57 1,300 955 Wind speeds >300 km/h, thunderstorms, large hail. Thousands of houses and cars damaged/destroyed. Losses to agriculture. 10 11–18.2 Floods Australia 2 1,100 890 Thunderstorms, high wind speeds, flash floods. 2,000 houses, 100 businesses flooded/ damaged. Losses to mines. 11 17–19.2 Cyclone Ivan Madagascar 93 60 Wind speeds up to 230 km/h, heavy rain, floods. >130,000 houses, bridges damaged/ destroyed. 500 km² of crops destroyed, livestock killed. 12 27.2 Earthquake Great Britain 40 30 Mb 4.8. Buildings, vehicles damaged. 13 Feb–March Floods, landslides Peru, Bolivia, Ecuador 50 175 Torrential rain. >62,500 houses damaged/destroyed. Roads, bridges destroyed. Losses to crops. Oil pipeline damaged, oil spilled. 14 1–2.3 Winter Storm Emma Europe 14 2,000 1,500 Wind speeds up to 150 km/h, thunderstorms, tornadoes, heavy rain, snowfall. Houses, vehicles damaged. Losses to industry and communication facilities. 15 5–11.3 Tropical Cyclone Jokwe Mozambique 17 20 Wind speeds up to 200 km/h, heavy rain. 20,000 buildings damaged/destroyed. >110 fishing boats damaged/destroyed. Bridge collapsed. 16 9–11.4 Severe storm USA: esp. AR, TX 3 1,100 800 Wind speeds up to 110 km/h, torrential rain, hail, flash floods. Thousands of houses and businesses damaged. >50,000 people without electricity. 17 2–5.5 Cyclone Nargis Myanmar 85,000 4,000 Wind speeds up to 215 km/h. 450,000 houses destroyed, 350,000 damaged. Crops destroyed, 156,000 head of livestock killed. Major losses to infrastructure. Missing: 54,000. 18 12.5 Earthquake China 70,000 85,000 300 Mw 7.9. Landslides, rockslides. >5 million houses destroyed, >21 million damaged. 50,000 greenhouses damaged/destroyed, 12,5 million head of livestock killed. Missing: 18,000. 19 22–26.5 Severe storm, tornadoes USA: esp. CO, MN 15 1,600 1,325 Wind speeds up to 260 km/h, thunderstorms, hail. Thousands of houses, businesses and vehicles damaged. Electricity and communication facilities interrupted. 20 23.5–23.6 Floods China 170 2,100 Torrential rain, landslides, rockfall. 3,000 schools, 140,000 houses damaged/destroyed. 530 km² of crops destroyed. 21 26–29.5 Snowstorm Mongolia 44 Wind speeds up to 145 km/h. Buildings damaged. Several hundred head of livestock killed. 22 29.5 Earthquake Iceland 80 75 M 6.2. Rockslides. Houses, roads damaged/destroyed. Livestock killed. 23 29.5–2.6 Severe Storm Hilal Germany 3 1,500 1,100 Thousands of houses, vehicles damaged. Hail damage to cars and vineyards. Losses to infrastructure. 24 5–8.6 Severe storm, tornadoes, USA: esp. MI,WI 1 1,500 725 Thunderstorms, wind speeds up to 130 km/h, hail, flash floods. Thousands of buildings floods damaged/destroyed. 25 18–25.6 Typhoon Fengshen Philippines. China 560 220 Wind speeds up to 140 km/h, flash floods, landslides. >85,000 houses destroyed, 270,000 damaged. 26 June Floods USA: esp. KS,WI 24 10,000 500 >5,000 buildings damaged/destroyed. Crops destroyed, livestock killed. Losses to infrastructure. 27 22.7–7.8 Floods Eastern Europe 38 800 Thunderstorms, heavy rain, landslides. 50,000 houses damaged. Crops destroyed. 28 23–25.7 Hurricane Dolly Mexico. USA 3 1,050 525 Wind speeds up to 160 km/h, heavy rain, flash floods, storm surge. Hundreds of houses damaged. Damage to oil platforms. Business interruption. 29 4.8 Tornado France 3 80 60 Wind speeds up to 215 km/h. 1,000 houses damaged/destroyed. 30 15.8 Hailstorm Slovenia 200 190 Thunderstorms, hail up to 6 cm in diameter. Houses, vehicles damaged. Losses to crops. 31 Aug–Sept Floods India, Nepal, Bangladesh 635 240 Torrential rain, landslides. 800,000 houses damaged/destroyed. Severe losses to agriculture. Evacuated: >10 million. Displaced: 3 million. 32 21.8–3.9 Hurricane Gustav Caribbean. USA 139 10,000 3,500 Wind speeds up to 240 km/h, tornadoes, heavy rain, flood. >140,000 houses damaged/ destroyed. Losses to oil platforms. Evacuated/displaced: >3 million. 33 25.8 Earthquake New Zealand 5 0.5 M 5.9/5.5. Property damage 34 Summer Drought Argentina 700 Severe losses to agriculture. 35 30.8–11.9 Bush fire South Africa 34 430 Wind speeds up to 100 km/h. 330 km² of forest burnt. Property damage. 36 August Tropical Storm Kammuri China, Vietnam 211 160 Wind speeds up to 95 km/h, flash floods, landslides. >4,000 houses destroyed, 18,000 damaged. Losses to agriculture and livestock. Affected: 125 million. 37 6.9 Rockslide Egypt 101 Massive rockfall. 30 houses buried. 38 6–8.9 Tropical Storm Hanna Haiti, USA, Canada 540 150 80 Wind speeds up to 95 km/h, heavy rain, flash floods. Hundreds of buildings damaged. 200,000 people without electricity. 39 7–14.9 Hurricane Ike Caribbean. USA 168 38,000 15,000 Storm surge. Hundreds of thousands of houses and vehicles damaged/destroyed. Losses to oil platforms. >2 million people without electricity. 40 8.9 Rockslide, mudslide China 277 Thousand of houses damaged/destroyed. 41 20–30.9 Typhoon Hagupit China, Philippines, Taiwan, 87 1,000 100 Wind speeds up to 220 km/h, torrential rain, flash floods, landslides. 30,000 houses Vietnam damaged/destroyed. 42 28.9 Typhoon Jangmi Taiwan 2 90 65 Wind speeds up to 155 km/h. 86,000 households without electricity. Losses to agriculture. 43 5.10 Earthquake Kyrgyzstan, China 85 Mw 6.6. >520 houses damaged/destroyed. Village destroyed. 44 14-19.11 Wildfire USA: esp. CA 2 2,000 600 Santa Ana winds, gusts up to 110 km/h. 1,000 houses destroyed. 87 km² of forest burnt. 45 15–23.10 Floods, landslides Honduras, Nicaragua, 50 Tropical depression. Mudslides. Thousands of houses destroyed, >11,000 damaged. Guatemala 46 24–25.10 Flood Yemen 185 400 Thousands of houses damaged/destroyed. Losses to infrastructure. 47 28/29.10 Earthquakes Pakistan 300 10 Mw 6.4. Landslides. >2,000 houses destroyed. 48 15–21.11 Severe storms, floods Australia 2 450 200 Gusts up to 130 km/h, large hail, flash floods, landslides. >4,000 houses damaged/ destroyed. >200,000 houses flooded. 49 Oct−Nov Flood, landslides Brazil 131 750 470 80% of Santa Catarina flooded. Thousands of houses damaged. 50 11–22.12 Winter storms, ice storms USA: esp. MA, NY 5 360 275 Wind speeds up to 100 km/h, heavy rain, floods, snow and ice. Houses, businesses and vehicles damaged. © 2009 Münchener Rückversicherungs-Gesellschaft Königinstrasse 107 80802 München Germany

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