THE INSURANCE industry celebrated yesterday after Swiss Re said the total bill for natural catastrophe payouts in 2012 will be around $65bn (£40bn), down from last year’s near-record $120bn.
Most of the total can be ascribed to the roughly $25bn cost of superstorm Sandy, which swept across the Caribbean and United States in late October. However the first nine months of 2012 were free from any disaster on the same scale as 2011’s Japanese tsunami, New Zealand earthquake or Thai floods.
Swiss Re estimates the total economic losses from natural catastrophes and man-made disasters to hit $140bn in 2012, of which almost half will be covered by insurers or reinsurers.
“Although insurance cannot bring back lost lives, many people and businesses can rely on financial relief from insurance cover, as is the case for the US,” said Swiss Re’s chief economist Kurt Karl.
“However, in large parts of the globe that are prone to severe weather events, people and businesses could increase risk-preparedness by eliminating underinsurance.”
Meanwhile Lloyd’s of London yesterday revealed that the insurance market will pay out $2bn to $2.5bn to meet claims from superstorm Sandy.
Lloyd’s said that it would be able to pay out with “minimal impact” on its members’ capital and it would not have to dip into its central fund – a reserve fund used to meet claims if a syndicate finds itself unable to pay.
Chief executive Richard Ward said: “The Lloyd’s insurance market remains financially strong and, while claims from this storm could still evolve over time, the market’s total exposure is well within the worst case scenarios we model and prepare for.”