Sigma No 1/2014: Natural catastrophes and man-made disasters in 2013: large losses from floods and hail; Haiyan hits the Philippines
In 2013, there were 308 disaster events, of which 150 were natural catastrophes and 158 man-made. Almost 26 000 people lost their lives or went missing in the disasters.
Typhoon Haiyan struck the Philippines in November 2013, one of the strongest typhoons ever recorded worldwide. It killed around 7 500 people and left more than 4 million homeless. Haiyan was the largest humanitarian catastrophe of 2013. Next most extreme in terms of human cost was the June flooding in the Himalayan state of Uttarakhand in India, in which around 6 000 died.
The total economic losses from natural catastrophes and man-made disasters were around USD 140 billion last year. That was down from USD 196 billion in 2012 and well below the inflation-adjusted 10-year average of USD 190 billion. Asia was hardest hit, with the cyclones in the Pacific generating most economic losses. Weather events in North America and Europe caused most of the remainder.
Insured losses were roughly USD 45 billion, down from USD 81 billion in 2012 and below the inflation-adjusted average of USD 61 billion for the previous 10 years, due largely to a benign hurricane season in the US. Of the total, natural catastrophes generated USD 37 billion of losses, and man-made disasters the other USD 8 billion in claims. The biggest losses came from large scale floods in Europe and Canada, record-level hail losses and multiple windstorm events in Europe, convective thunderstorm and tornado events in the US, and Haiyan in the Philippines.
Emergency preparedness and disaster risk management progressed in 2013. However, disaster events continue to generate increasing financial losses alongside ongoing economic development, population growth and global urbanisation. This sigma edition includes a special chapter on climate change, which will likely be an additional and increasingly important loss-generating force in the future.
Climate change is widely acknowledged to be caused by greenhouse gas emissions from human activity, and could lead to increasing frequency and intensity of extreme weather events. According to the Stern Review on the Economics of Climate Change1, if left unchecked the cost of climate change could increase to around 20% of global GDP by the end of this century. Dealing with climate change requires a reduction in greenhouse gas emissions alongside an integrated approach to disaster risk management. This report describes how cost-effective adaptation measures could avoid up to 68% of climate change risks.
Along with local prevention and mitigation measures, insurance is a powerful measure to strengthen resilience against catastrophe events. The wide gap between economic and insured losses caused by natural disasters places a significant burden on the public sector and, ultimately, uninsured individuals and businesses. By pricing risk and thus incentivizing investments in prevention measures, the reinsurance and insurance industries can help reduce the economic and social costs of catastrophes.