Insured losses totalled $77bn in 2012, making it the third most costly year on record for the risk transfer industry, according to new figures from Swiss Re.
Losses were dominated by large, weather-related incidents in the US. The country witnessed nine of the ten largest losses, which added up to a bill of $65bn for the insurance industry. Superstorm Sandy recorded the largest single loss at $35b.
According to Swiss Re’s latest Sigma study, worldwide economic losses from natural catastrophes and man-made disasters reached $185 billion in 2012, with approximately 14,000 fatalities.
The insured loss figure of $77bn was still significantly lower than the record year of 2011 when earthquakes and flooding in the Asia Pacific region caused historic insured losses of over $126bn.
Kurt Karl, Swiss Re’s chief economist, said: “The severe weather-related events in the US provided a reminder of the value of insurance and the vital role it plays in helping individuals, communities and businesses to recover from the devastating effects of catastrophes. However, large parts of the globe that are prone to weather extremes were not able to rely on financial relief due to low insurance penetration.” Superstorm Sandy caused an estimated total of $70 billion in economic losses, making it the second most damaging hurricane on record after Hurricane Katrina in 2005.
Of the $35 billion in insured losses from the event, the private insurance market covered $20bn to $25bn. The remaining figure was incurred by the US’ National Flood Insurance Program.
Matthias Weber, Swiss Re’s group chief underwriting officer, said on the superstorm: “Sandy challenged the industry with its combination of record wind field and storm surge. The possibility that such events could increase in frequency and strike densely populated regions such as the northeast US means that extreme storm surges need to be more thoroughly understood.”