Despite a year of one disaster after another, last year was only the second most expensive year on record for the global insurance industry. It could have been much worse, however, according to Swiss Re. If more insurance coverage had existed in Japan, the year would have topped 2005—the year of Hurricane Katrina. Nonetheless, the global economy lost a record $370 billion to natural disasters that ranged from earthquakes to flooding.
Reuters reported that Swiss Re’s study of disasters, both natural and manmade, in 2011 showed insured catastrophe losses that reached $116 billion, compared with $123 billion in 2005. In December the company estimated the year would come in at $108 billion. Munich Re in January had estimated the cost of natural disasters for 2011 at $105 billion.
The insurance industry is obligated to pay for approximately 80% of the economic loss that resulted from the New Zealand earthquake—the third most expensive disaster of its kind at $12 billion. The most expensive earthquake ever was the March quake in Japan, which by itself was responsible for more than half of the year’s economic loss.