Natural disasters, including U.S. hurricanes and Asian typhoons, cost insurers $42 billion this year, making 2004 the costliest ever for the industry, even before tsunamis struck tourist resorts in Thailand and Malaysia.
It’s too early to know how much the destruction caused by Sunday’s tsunamis will add to this year’s insured loss damage, Robert Hartwig, chief economist for the industry-sponsored Insurance Information Institute in New York, said.
Hurricanes Charley, Frances, Ivan and Jeanne slammed into Florida during August and September, and a record 10 typhoons struck in the Pacific Ocean. Before the tsunamis, natural and man-made disasters had already caused $105 billion in total economic losses, according to Swiss Reinsurance Co.
“This year was already a record year in terms of insured losses from catastrophes,” Hartwig said Monday.
Swiss Re, the world’s second-largest reinsurer, said claims from the tsunamis will probably be lower than the estimated $27 billion of insured damages tied to U.S. hurricanes this year. Hartwig agrees, expecting losses to be between “hundreds of millions of dollars” and $5 billion because the U.S. has much more insured property than the areas hit Sunday.
Total economic losses include insurance damage, tourism and lost employment.
“Obviously this adds to those losses, but probably by not as much as you would expect by the toll of the human tragedy, because of where it occurred,” Hartwig said. “India and Sri Lanka are highly populated, but it is not typically the case that they buy insurance.”
Total insurance premiums per capita in the U.S. averaged $3,638 last year, according to Swiss Re. In Indonesia, the average was $14.50.
“Some of these markets, particularly India, have had high barriers to foreign insurance,” Stuart Quint, an analyst at Gartmore Global Investments in West Conshohocken, Pa., said.
Gartmore, which manages more than $75 billion, held more than 2 million shares of American International Group Inc., the world’s largest insurer, as of September.
Munich Re, the world’s largest reinsurer, said it may be able to provide a damage estimate for the tsunamis when the Munich-based company releases an annual report on natural disasters later this week.
The U.S. hurricanes caused $50 billion in total losses, making 2004 Florida’s most expensive season in history, according to estimates by Wachovia Corp. Charley, Frances, Ivan and Jeanne damaged 330,000 homes, prompting the U.S. Congress to earmark $13.6 billion to help hurricane victims. The Atlantic hurricane season lasts from June 1 to Nov. 30.
The storms killed more than 3,000 people, mostly in Haiti, where Jeanne caused flooding.
Florida’s tourism industry, which had a 4 percent drop in visitors from July through September compared with the same period a year earlier, is recovering, according to Wachovia senior economist Mark Vitner.
“2005 will be a record year for tourism in Florida,” he said, citing an expanding U.S. economy and a weaker dollar that will attract foreign tourists.
Typhoons Songda, Tokage and Chaba, which struck Japan between June and October, caused insured losses of $4 billion. Economic losses were $9.4 billion, according to Swiss Re.
The Chuetsu earthquake in Japan in October caused $19 billion to $28 billion in economic damage and $600 million in insurance claims.
The second-costliest year for the insurance industry was 1992, when Hurricane Andrew hit the Miami area and Hurricane Iniki struck Hawaii. The two storms helped generate $38 billion in insured losses. The Sept. 11 terrorist attacks on New York and Washington caused insured losses of $37 billion, the third-highest annual total.
