NATURAL disasters cost insurers US$65 billion last year, with the United States accounting for nine-tenths of the bill and Superstorm Sandy prompting payouts of US$25 billion, a leading insurance company said yesterday.
However, Munich Re AG said that the total insured losses worldwide were down from a record US$119 billion in 2011, when devastating earthquakes in Japan and New Zealand cost the industry dear.
The company said total economic costs in 2012 from natural disasters worldwide -- including uninsured losses -- amounted to US$160 billion, compared with the previous year's US$400 billion.
Sandy, which battered eastern coastline areas at the end of October, killed at least 125 people in the United States and 71 people in the Caribbean. New York, New Jersey and Connecticut were the hardest-hit US states.
Sandy hit the Caribbean before making landfall on the US East Coast.
Jamaica's eastern parishes were devastated by the storm, but the island's insurance industry expected losses to be minimal. The worst of the storm missed the Corporate Area, where most of the insured properties are, insurers said. And while there were billions of dollars in estimated losses to crops and infrastructure, neither is heavily insured
Munich Re estimated insured losses from Sandy at US$25 billion and total losses at US$50 billion, though it cautioned that the figures are "still subject to considerable uncertainty." That made it the year's most costly disaster -- but several other events in the US meant that the country accounted for 90 per cent of insured costs and 67 per cent of overall losses, the company said.
Over the past decade the well-insured US on average accounted for 57 per cent of insured losses and 32 per cent of overall costs every year.
The lengthy drought that seared swathes of the United States last summer produced 2012's second-biggest insurance bill. Munich Re said the insured losses, being picked up by a public-private crop insurance programme, totaled between US$15 billion and US$17 billion -- most of the US$20 billion worth of overall crop losses.
That was the biggest loss in US agricultural insurance history, comparing with average insured losses of about US$9 billion a year, Munich Re said.
Severe storms and tornadoes in March, late April, June and July completed Munich Re's list of the five costliest disasters for insurers in 2012, each costing US$2.5 billion.
Back-to-back earthquakes in northern Italy last May caused total losses of US$16 billion, but only one-tenth of that was covered by insurance. Deadly flooding in China in July caused damage worth US$8 billion, but only a small fraction of that -- US$180 million -- was insured.
Munich Re board member Torsten Jeworrek said in a statement that last year's heavy losses from weather-related disasters in the US "showed that greater loss-prevention efforts are needed".
"It would certainly be possible to protect conurbations like New York better from the effects of storm surges," he added, without specifying how. "Such action would make economic sense and insurers could also reflect the reduced exposure in their pricing."
The head of the company's risk research unit, Peter Hoeppe, said that while it isn't possible to attribute any single event to climate change, studies suggest that Sandy and the drought are "the type of events we can expect to contend with more often in the future."
Munich Re's main business is reinsurance, which means offering backup policies to companies that write primary insurance policies. Reinsurance helps spread risk so that the system can handle large losses from natural disasters.
— Additional reporting by the Jamaica Observer