Natural catastrophes cost insurers $20bn in 2009; economic loss $58bn according to Aon Benfield study

Aon Benfield, the world’s premier reinsurance intermediary and capital advisor, today releases its Annual Global Climate and Catastrophe report, which analyses global natural perils in 2009 and the resultant economic and insured losses.

The 68-page report, published by the company’s Impact Forecasting team, who provide catastrophe modeling solutions to Aon Benfield clients, reveals that insured losses from worldwide natural catastrophic events were USD20bn with a total economic loss of USD58bn. Catastrophe activity levels were similar to the past two years, comprising at least 222 separate events compared to 213 events in 2008 and 217 events in 2007. Overall, it was a very light catastrophe year, for the third year in a row.

Windstorm Klaus, which predominantly affected France, Spain and Italy, was 2009’s costliest event from both an insured and economic perspective, resulting in losses of USD3.3bn and USD6bn respectively.

Events in Asia affected the largest number of individual structures; Typhoon Ketsana, which struck the Philippines and Vietnam in September, damaged more than seven million structures, yet resulted in a relatively small insured loss of USD260mn.

The Global Climate and Catastrophe report highlights that no single insured loss event above USD5bn occurred this year. In 2008, Hurricane Ike caused more than USD12.5bn in insured losses, and in 2007 Windstorm Kyrill cost insurers over USD6.2bn.

From a climate perspective, 2009 was the fifth warmest year on record and the 32nd consecutive year of above average global temperatures.

Bryon Ehrhart, Chief Executive Officer of Aon Benfield Analytics, said: “The report highlights that there is still a high prevalence of natural catastrophes throughout the world, and that the resulting insured and economic losses are extremely costly to global insurers, governments and the general public. Insurers and reinsurers need to become even more aware of their risks and exposures in catastrophe-prone areas, as well as reviewing the latest research into natural perils to try to stay ahead of the game. They need to continue to manage their risks through the most effective portfolio optimization and catastrophe modeling tools. At Aon Benfield, our market leading natural perils research and extensive suite of catastrophe modeling tools is redefining the way our clients consider catastrophe risk and the exposures inherent in their individual and unique portfolios.”

Key findings from the 2009 worldwide storm seasons included:


* Atlantic – Nine named storms developed (31% below 25-year average), including three hurricanes (53% below average) and two major hurricanes (29% below average). No hurricanes made landfall in the US.
* Eastern Pacific – A total of 20 named storms (25% above 25-year average) with eight hurricanes (11% below average) and five major hurricanes (28% above average). One hurricane, Jimena, made landfall.
* Western Pacific – A total of 25 named storms (17% below 25-year average) with 14 typhoons (18% below average) and seven major typhoons (22% below average). Eight typhoons made landfall (11% below average).
* Indian Ocean and Southern Pacific – 29 named storms (13% below 25-year average) with eight cyclones (49% below average) and five major cyclones (34% below average). Three cyclones made landfall (38% below average).
* US Tornado – Approximately 1,109 tornadoes (2% below 25-year average).

The report reveals that lower insurance take-up in poorer areas of the world resulted in larger economic loss events. Typhoon Morakot, which affected 3.9million structures in Taiwan, China and the Philippines resulted in an economic loss of more than USD5bn but a relatively small insured loss of USD100mn.

Meanwhile, the West Sumatra earthquake highlighted the low penetration of earthquake insurance in the region. The magnitude-7.6 earthquake affected more than 249,800 structures in Indonesia, leading to economic losses of USD2.2bn but an insured loss of around USD40mn – less than 2% of the economic loss total. Reconstruction costs have been estimated at USD860mn.

According to the Global Climate and Catastrophe report, Hurricane Katrina remains the costliest insurance event in history, resulting in insured losses of around USD45.5bn after it struck in 2005.

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Impact Forecasting
Impact Forecasting LLC is a catastrophe modeling center of excellence within Aon Benfield Analytics whose seismologists, meteorologists, hydrologists, engineers, mathematicians, GIS experts, finance, risk management and insurance professionals analyze the financial implications of natural and man-made catastrophes around the world. Impact Forecasting’s experts are redefining the software tools and models that help clients understand underlying risks from hurricanes, tornadoes, earthquakes, floods, wildfires and terrorist attacks on property, casualty and crop insurers and reinsurers. Impact Forecasting is the only catastrophe modeling firm integrated into a reinsurance intermediary. To find out more about Impact Forecasting, please visit www.impactforecasting.com.

About Aon Benfield
As the industry leader in treaty, facultative and capital markets, Aon Benfield is redefining the role of the reinsurance intermediary and capital advisor. Through our unmatched talent and industry-leading proprietary tools and products, we help our clients to redefine themselves and their success. Aon Benfield offers unbiased capital advice and customized access to more reinsurance and capital markets than anyone else. As a trusted advocate, we provide local reach to the world’s markets, an unparalleled investment in innovative analytics, including catastrophe management, actuarial, and rating agency advisory, and the right professionals to advise clients in making the optimal capital choice for their business. With an international network of more than 4,000 professionals in 50 countries, our worldwide client base is able to access the broadest portfolio of integrated capital solutions and services. Learn more at www.aonbenfield.com.