During the first half of 2011, the P&C industry saw an unprecedented number of severe natural catastrophes in both the U.S. and abroad.
The accumulation of a total of 100 events—taking into account the deadly thunderstorms and deluge of tornadoes—produced an excess of $18 billion (and climbing) insured losses in the U.S. alone. The global distribution of natural loss events, including the 9.0-magnitude earthquake in Japan, along with the resultant tsunami, the earthquake and flooding in New Zealand, and the tornadoes and flooding in the U.S., has already made 2011 the costliest year for natural disasters on record.
A total of 355 events transpired during the first six months of the year and the likelihood of more severe storms is very high. Although there has only been one named storm since the beginning of the Atlantic hurricane season on June 1, CSU scientists predict a “75 percent more active Atlantic hurricane season than usual.”
In today’s webinar, top advisors from Munich Re and the Insurance Information Institute (I.I.I.) provided a detailed overview of current and projected losses, as well as some precipitating factors, such as strong La Niña and climate changes.
“It has been a momentous year so far, one for the record books,” said Dr. Robert P. Hartwig, I.I.I. president and economist, who spoke at Munich Re’s web seminar titled, “2011 Half-Year National Catastrophe Review,” along with Dr. Peter Höppe, head of Geo Risks Research/Corporate Climate Center, Munich Re, and Carl G. Hedde, head of risk accumulation at Munich Reinsurance America, Inc.
Dr. Hartwig noted that three events of the past six months have been added to the list of the 16 costliest insured world disasters, emphasizing that this year has been unusual in the number of major disasters that fell outside of U.S. soil. He also went on to explain a “sense of rewriting the economics of the history of disaster in the U.S. and on the global scale.” Other than the sheer magnitude of loss incurred this year, Dr. Hartwig said the tremendous efforts by insurers to help those in storm-ravaged areas have been noteworthy.
After comparing the catastrophe activity of this year against prior years dating back to 1953, the speakers shifted focus to the implications on the U.S. P&C industry, adding that “profit recovery will be set back by the high catastrophe losses.”
Despite these pressures, Dr. Hartwig pointed out that the industry is nevertheless able to weather a soft market and series of large-loss events.
“The P&C portfolio is extremely liquid,” he concluded. “There is no question that the industry is able to meet all of its commitments both here and abroad.”