While the world has been beset in recent years with various natural disasters–from heat waves in Europe and flooding in Asia to flooding, drought and wildfires in Australia to earthquake and tsunami in Japan–those caused by severe weather have hit the U.S. hardest, according to a study released on Oct. 17 by the massive German reinsurer Munich Re.
A Huffington Post report cited the study in a piece that tied the effects of climate change to the fury of Sandy–also dubbed “Frankenstorm” for its composite nature and its timing during the Halloween season. While doubt over the reality of climate change may persist most strongly in the U.S., ironically, its effects are hitting North American shores–and heartland–the hardest, and insurers cannot afford to doubt the connection.
Munich Re’s report, “Severe weather in North America,” the company said in a statement, “analyzes all kinds of weather perils and their trends. It reports and shows that the continent has experienced the largest increases in weather-related loss events.”
The reinsurer said that the report was prepared “to support underwriters and clients in North America, the world’s largest insurance and reinsurance market … Munich Re analyzes the frequency and loss trends of different perils from an insurance perspective. The North American continent is exposed to every type of hazardous weather peril–tropical cyclone, thunderstorm, winter storm, tornado, wildfire, drought and flood.”
Sandy packed so much of a wallop because it combined several different forms of peril in one deadly package. A Bloomberg report puts loss estimates from Sandy at over $20 billion and adds that, of the total, perhaps $7–$8 billion will be insured.
The uninsured losses will fall disproportionately to the public sector, according to Charles Watson, research and development director at Kinetic Analysis Corp., a hazard research company in Silver Spring, Md. The cost will include, he said in the report, repairs by cities and states to infrastructure such as the tunnels and subways in New York.
Watson added that the massive losses suffered by public infrastructure would in some ways mirror the effects of 2005’s Hurricane Katrina, which devastated New Orleans and was the country’s most expensive natural disaster. According to the Insurance Information Institute, insured property losses from Katrina were estimated at $41.1 billion.
“Nowhere in the world is the rising number of natural catastrophes more evident than in North America,” said the Munich Re statement. “The study shows a nearly quintupled number of weather-related loss events in North America for the past three decades, compared with an increase factor of 4 in Asia, 2.5 in Africa, 2 in Europe and 1.5 in South America. Anthropogenic climate change is believed to contribute to this trend, though it influences various perils in different ways ... Among many other risk insights the study now provides new evidence for the emerging impact of climate change.”
Prof. Peter Höppe, who heads Munich Re’s Geo Risks Research unit, was quoted saying, "In all likelihood, we have to regard this finding as an initial climate-change footprint in our U.S. loss data from the last four decades. Previously, there had not been such a strong chain of evidence. If the first effects of climate change are already perceptible, all alerts and measures against it have become even more pressing.”