Economic growth drives natural catastrophe claims

Experts on natural catastrophe risk at Allianz have highlighted the growing trend in insured losses arising from natural catastrophes worldwide in a risk briefing – the Allianz Risk Pulse: Focus Natural Catastrophes – which is released today. The average annual cost of insured claims from natural catastrophes has increased eight-fold since 1970 (up from some 5 billion US-dollars in the 1970s and 1980s to over 40 billion US-dollars in 2010).

The main reason is economic growth: property values are rising, population density and insurance penetration are increasing, often in high risk areas – a trend that is compounded by the fast growth of some Asian economies in catastrophe-prone regions. The impact of climate change must also be closely watched.

The Allianz analysts have also noted that, during the past decade, the earthquakes which caused the highest fatalities were not necessarily the strongest ones. For example, the 2010 quake in Haiti released 500 times less energy than the quake that hit Chile two months later – yet the Haitian quake wreaked much more havoc. The factors which determine the impact are complex and include building design and materials, severity of secondary earthquake effects like tsunamis or fires and lack of preparedness.

"The most important thing is to help those affected unbureaucratically and quickly – and to have a lot of empathy"

On March 11, 2011, at 5.46 UTC an earthquake of 9.0 magnitude occured near the East Coast of  Honshu, Japan. A devastating tsunami and many aftershocks

Proper risk management prior to an event and preparation for a possible natural disaster are identified as key factors in reducing the impact. Using their experience of risk management and claims investigations, insurers such as Allianz can advise their clients on how to analyze risks including natural catastrophes, how to prepare in advance and (for businesses) how to restore operations quickly after an event – a vital element in minimizing business interruption losses.

The insurance industry plays an important role when it comes to helping those affected by natural catastrophes, advising on preparedness and prevention and analyzing risk. Teams of claims regulators, risk managers, natural catastrophe experts and economic research specialists work hard to support clients and to understand natural catastrophes and their effects.

"Terrible events like major natural catastrophes illustrate the value and importance of insurance to society," says Clement B. Booth, board member of Allianz SE in the Allianz Risk Pulse. "The most important thing is to help those affected unbureaucratically and quickly – and to have a lot of empathy."

Largest natural catastrophes 1970-2011 

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