Tropical cyclones
Tropical cyclones can affect almost the entire North American East and Gulf
Coasts -- especially if they develop into hurricanes. A main loss driver is the
concentration of people and assets on the coast combined with high and possibly
growing vulnerabilities. In recent years, not only high winds but storm surge
risk has moved into focus, given that it carries an immense loss potential and
is responsible for fatalities in high numbers. August 24, 2012 marked the 20th
anniversary of Hurricane Andrew, the 20th century's most expensive hurricane,
resulting in original losses of US $17 billion for the insurance industry. It was
considered a wake-up-call. Following Andrew, US building codes were tightened
and the insurance industry introduced complex risk models, while calling for
stronger prevention measures. Therefore if an Andrew-type event occurred today
affecting the same region, the normalized losses would probably be lower.
Thunderstorms
The study draws special attention to thunderstorms: besides tropical cyclones,
thunderstorms are the most important severe weather hazard for the insurance
industry in the US. Between 1980 and 2011, 43% of insured property windstorm
losses (US $180 billion) were caused by severe thunderstorms. Thunderstorm-related
losses have increased over the past 40 years. The study identifies two major
drivers of this trend. One factor is urban sprawl exposing higher destructible
values to the forces of thunderstorms. Parallel to this, the study provides
strong indication that changing climatic conditions are having a visible
impact.
Floods
Several hundred loss events resulting from floods add up to
a billion-dollar figure every year. While exposure to flooding is increasing,
flood control and protection measures that counteract this are being improved.
Even if they are expensive, measures for flood protection do pay off. Without
flood management and control structures, the cost of the 2011 flood on the
Mississippi, around US $5 billion, would have amounted to more than US$ 100bn.
Heat-waves and droughts
Other events like heat-waves, droughts and wildfires
contributed 15% (US $160 billion) to the overall losses from severe weather events,
with droughts accounting for more than half of this. Climate change will alter
the occurrence of extremely dry and hot weather conditions. The loss potential
of droughts and heat-waves is often underestimated, as their impact is only
felt gradually but affects every sector from private households, infrastructure
and power supply to agriculture over a huge area. On top of this, long dry
periods create ideal conditions for promoting the outbreak and spread of
wildfires. New high-temperature records have been set in recent years. To date
(including September) 2012 has been the warmest year in the US since the
beginning of weather records in 1895, with a mean temperature 3.8 F (2.1 C)
above the 20th century average. Nearly two thirds of the area under cultivation
was affected by the drought in 2012, which was among the most extreme events of
the last 50 to 100 years. Crop insurance will play an even more significant
role as climate change evolves.
Munich Re stands for exceptional
solution-based expertise, consistent risk management, financial stability and
client proximity. Munich Re creates value for clients, shareholders and staff
alike. In the financial year 2011, the Group -- which pursues an integrated
business model consisting of insurance and reinsurance -- achieved a profit of $0.71 billion on premium income of around $50 billion. It operates in all lines of
insurance, with around 47,000 employees throughout the world. With premium
income of around $27 billion from reinsurance alone, it is one of the world's leading
reinsurers. Especially when clients require solutions for complex risks, Munich
Re is a much sought-after risk carrier. Its primary insurance operations are
concentrated mainly in the ERGO Insurance Group, one of the major insurance
groups in Germany and Europe. ERGO is represented in over 30 countries
worldwide and offers a comprehensive range of insurances, provision products
and services. In 2011, ERGO posted premium income of $20 billion. In international
healthcare business, Munich Re pools its insurance and reinsurance operations,
as well as related services, under the Munich Health brand. Munich Re's global
investments amounting to $202 billion are managed by MEAG, which also makes its
competence available to private and institutional investors outside the Group.
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