Aon Benfield, a global reinsurance intermediary, recently released its August edition of the Global Catastrophe Recap report. The report, published by the company’s catastrophe modeling arm known as Impact Forecasting, showed that natural disaster events revealed disparities in the global levels of insurance penetration.
Catastrophic Events of August, 2012
Several natural disasters affected different parts of the world in August 2012.
The first land-falling natural disaster along the American Gulf Coast was Hurricane Isaac, which killed at least 34 people in the Caribbean and seven others in the United States.
Typhoon Damrey, which affected China, proved to be the costliest, with total economic damages estimated at $3.28 billion, according to the country’s Ministry of Civil Affairs.
Eastern China also suffered from Typhoon Haikui, which caused economic losses worth $2.04 billion. The typhoon caused torrential monsoon rains that flooded Luzon Island. The floods affected up to 90 percent of Metro Manila at some point, killing at least 109 people and causing economic losses of $239 million. However, most of the losses were in the private sector and are not included in this total.
Super Typhoon Bolaven killed at least 20 people and caused extensive damage in South Korea, with the total economic losses estimated at $177 million. Iran experienced two powerful earthquakes measuring 6.3 and 6.4 respectively. Most of the 306 people killed and over 3,000 injured were from the East Azerbaijan Province.
Mexico was hit by Tropical Storm Helene and Hurricane Ernesto. While drought ravaged Russia and Italy, flooding affected various parts of the world, including Pakistan, China, India, Senegal, Sudan, Nigeria, Niger, Cameroon and Chad.
An Opportunity for Insurers
The catastrophic events led to different levels of insured loss claims in different parts of the world. The Global Catastrophe Recap enables insurers and reinsurers to know the regions where they have the best opportunities and where there is room for growth.
While the total economic losses from Typhoon Damrey were listed at $3.28 billion, insured losses accounted for only $124 million. Payouts for Typhoon Haikui amounted to $230 million, compared to economic losses of $2.04 billion. This shows there are still good opportunities for insurers and reinsurers in China.
According to Steve Jakubowski, the president of Impact Forecasting, the costly global cyclone events witnessed in August highlighted disparities in relative insurance penetration levels and risk management procedures used in different countries.
In the case of Typhoon Damrey that affected China, insurance coverage was just about three percent of the economic losses incurred. Typhoon Haikui, which affected a more populous and developed area, revealed about 10 percent insurance coverage. The insurance claims received so far in the U.S. for Hurricane Isaac are comparatively higher.
The total economic losses from Hurricane Isaac were estimated at single-digit billions of U.S. dollars. However, available statistics are still not enough to determine whether its insured losses will surpass those of the 2008 Hurricane Gustav, which amounted to $2.3 billion. Insurers received over 28,000 auto and home insurance claims within a few days of the landfall.
The Global Catastrophe Recap report showed that insurance penetration level in South Korea is better than in China. Auto and agriculture insurance claims received for Super Typhoon Bolaven were valued at over $106 million, a penetration level of almost 60 percent.
The Chinese insurance market does not seem to have any option but to open up to international insurers and reinsurers. There are also good opportunities in many developing nations.
About the author
Ty Whitworth writes for whole life investment information.
JRO
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