Extreme Weather Losses
Soar to Record High
December 16, 2004 — By UN Environment Programme
Insurance Industry Facing $35 Billion Plus Bill for 2004
BUENOS AIRES, 15 December - 2004 is set to go down in the history books as the
most expensive year for the insurance industry world-wide as a result of
hurricanes, typhoons and other weather-related natural disasters.
Figures released today at the international climate change conference taking
place in Buenos Aires, Argentina, show that for the first 10 months of this year
natural disasters cost the insurance industry just over $35 billion, up from $16
billion in 2003.
The United States, at over $26 billion, suffered the highest insured losses,
according to the preliminary figures compiled by Munich Re, one of the world's
biggest re-insurance companies.
The global insured losses are likely to be even higher when the months of
November and December are brought into the equation.
Economic losses, the majority of which were not insured, will also have cost the
planet and its people dear.
Preliminary figures for the months January to October estimate that these losses
were also among the highest on record totalling, so far, about $90 billion up
from over $65 billion in 2003.
Hardest hit have been many small, developing countries with the islands of
Grenada and Grand Cayman in the Caribbean underlining the impact on fragile
economies.
Hurricane Ivan, which struck Grenada in September, killed 28 people and is
estimated to cost $1 billion in damaged homes, buildings and agricultural
losses.
It may take several years for the key crops of nutmeg and cocoa to recover,
leaving thousands of workers facing unemployment until the production is
restored.
The insurance industry is worried that new, climate-related risks, may be
emerging. Hurricane Catarina, which hit Brazil earlier this year, developed in
the southern Atlantic where normally sea surface temperatures are too low to
trigger tropical cyclones.
Klaus Toepfer, Executive Director of the United Nations Environment Programme (UNEP),
which today released the estimates at the 10th Session of the Conference of the
Parties to the UN Framework Convention on Climate Change, said: "Climate
change is already happening, with rapid melting of the Arctic and glaciers world
wide. Climate scientists anticipate an increase and intensity of extreme weather
events and this is what the insurance industry is experiencing, resulting in
year-on-year losses."
"In many developing countries, the impacts of high winds and torrential
rains are aggravated by a variety of factors ranging from the clearing for
forests making hilly slopes more vulnerable to land slips and slides to a lack
of enforcement of building codes. Reducing vulnerability and helping poorer
nations cope with the ravages of climate change is vital. Some experts estimate
that for every dollar invested in disaster preparedness, you will save $6 in
reconstruction costs", he said.
"However, it cannot be an alibi for inaction on emission cutbacks. In the
end, many smaller countries, like low-lying small island developing States and
countries like Bangladesh, can only adapt for so long before they are eventually
over come by the impacts of storm surges and rising sea levels", said Mr.
Toepfer.
The findings on the preliminary costs of weather-related natural disasters have
come from Munich Re, one of the world's biggest re-insurance companies and a
member of the UNEP Finance Initiative.
Thomas Loster, a senior executive and climate expert with Munich Re, said:
"As in 2002 and 2003, the overall balance of natural catastrophes is again
clearly dominated by weather-related disasters — many of them exceptional and
extreme. Indeed 98 per cent of all losses for 2004 and about 100 per cent of
insured losses were weather driven. We need to stop this dangerous experiment
human-kind is conducting on the Earth's atmosphere."
"According to our latest findings, economic losses from January to October
are in the order of $90 billion. The average value of the last 10 years has been
$70 billion. Insured losses, driven by weather or climate-related disasters,
will amount to more than $30 billion, making 2004 the costliest natural
catastrophe year ever for the insurance industry world-wide. There are
indications that the figures will further increase", he said.
"I would urge delegates and Governments here in Buenos Aires to make a
strong commitment to a post-Kyoto agenda, otherwise the industry's appetite to
finance and insure projects under the instruments of the Kyoto Protocol, such as
the Clean Development Mechanism, will be blunted", said Mr. Loster.
A Few Key Disasters in 2004 Hurricane Catarina hit southern Brazil in March
causing an estimated $350 million in economic losses. This was the first time
since world-wide observations began that a hurricane developed in the southern
Atlantic where sea surface temperatures are usually too low for tropical
cyclones.
Hurricane Jeanne released torrential rain on Hispaniola, causing severe flooding
and killing more than 2,000 people in Haiti and the Dominican Republic.
A record number of 10 typhoons made landfall in Japan, the most destructive of
which were Chaba, Songda and Tokage, one of the strongest typhoons ever.
Altogether they caused economic losses of $10 billion and insured losses of more
than $6 billion.
Hurricane Ivan was one of the most destructive and strongest storms ever,
maintaining a strength of category force four to five on the Saffir Simpson for
more than five days. Apart from the Caribbean islands, the storm also caused
serious damage to offshore platforms in the Gulf of Mexico. Economic losses are
estimated as up to $3 billion.
Dr. Kenrick Leslie, Director of the Caribbean Community Climate Change Centre
hosted by the Government of Belize and supported by UNEP, said Ivan was as a
"unique event never before seen in the Caribbean".
"Grenada normally escapes such events. But here was a hurricane that formed
south and east of the Antilles. It is believed to be the first in recorded
history of a hurricane forming so far south and east of the Antilles", he
said.
Dr. Leslie, who established the national meteorological service in Belize and
whose organization covers 15 countries in the wider Caribbean, said the impact
on the economy of Grenada was "both worrying and distressing".
The estimated damage of $1 billion was twice the island's gross domestic
product.
Close to 30,000 houses or nearly 90 per cent were damaged of which 10,000 or a
nearly a third were beyond repair.
Schools and centres of learning were hit amounting to $90 million in damages
with over 30,000 students affected.
Damage to hospitals and public health care centres is estimated at over $4
million and over 38,000 people have been left unemployed in the key agricultural
sectors of nutmeg and cocoa.
Notes to Editors The full report by Munich Re will be published in early 2005;
see www.munichre.com
Details of the Caribbean Community Climate Change Centre can be found at www.caribbeanclimate.org
For more information, please contact: in Buenos Aires: Nick Nuttall, UNEP Head
of Media, on Mobile: +54-9-11-4979 2097 or E-mail: nick.nuttall@unep.org
www.unep.org