The 2005 assessment

Described by the Wild World Fund (WWF)'s report as the hottest, the driest and the most tormented in the history of the earth, 2005 has broken all the pre-established records, all parameters included.

2005: A record-breaking performance!

  • Photo credit: US Gov. / NASAin terms of extreme climatic occurrences since 1850,
  • in terms of ice melting in the Arctic whose decline is rated at 9.8% per decade,
  • in terms of temperatures rise since 1990,
  • in terms of rainfall level, particularly in Asia,
  • in terms of droughts, particularly in Amazonia,
  • in terms of duration and intensity of cyclones and hurricanes in the Atlantic and Pacific regions, on the rise by 50% since the 1970s,
  • in terms of economic damages and financial losses for the insurers.

A nasty bill

Photo credit: US Gov. / FEMA, Jocelyn AugustinoFor Munich Re, the bill is estimated at 200 billion USD, of which 75 billion USD for the insurers' share.
For Swiss Re, the bill amounts to 225 billion USD, of which 80 billion USD relate to material damages, excluding the damages caused by the December 2005 blaze in Buncefield (Great Britain).

Approximately 88% of the total losses have been reported in the United States. In Europe, the damage toll amounts to 6 billion USD.

By way of comparison, the year 2004, already deemed as exceptional, has cost 145 billion USD, of which 45 billion USD for the insurers' share.

A spate of extreme events

The calamities have been particularly deadly: over 112,000 victims, of whom 87,000 for just the October earthquake in northern Pakistan. In the course of the year 2005, a total of 650 catastrophes have been reported, of which 26 were classified extreme, that is, 5 more occurrences than the previous record.

Among the most significant ones, we list the following:

  • Beginning of 2005: the Erwin storm in Denmark, Sweden and United Kingdom has generated 1.5 billion USD losses.
  • August 2005: heavy downpours and floods in Switzerland, Germany and Austria have set insurers back 1.9 billion USD.
  • September 2005: Katrina, the extremely devastating hurricane, has caused between 125 and 145 billion USD damages, of which 45 billion USD being insured. The previous record in concern was then held by hurricane Andrew in 1992 which cost insurers 22 billion USD, followed by the September 11, 2001 attacks, whose bill amounted to 21 billion USD.
  • October 2005:
    • Wilma has been the most violent hurricane which lashed the coasts of Mexico and the Caribbean with economic damages up to 15 billion USD, of which 10 billion value of insured properties.
    • Rita has left a trail of economic damages worth 15 billion USD, 8 billion USD of which being insured.
    • The hurricane Vince was the first in history to come close to Europe (Spain).
  • November 2005: Delta was the first tropical storm to have lashed the Canary Islands.

The assessment: conclusions and lessons

The climatic changes have had their toll on the populations and communities causing them to be more vulnerable to natural catastrophes.

Some kind of correlation, though not yet established as a general truth by the international scientific community, is admitted between human activities, global warming, intensity and frequency of extreme climatic disorders. The rising trend of devastating events is accounted for by the high density of population and constructions in exposed areas, and by the increased concentration of insured values.

In an effort to reduce the exposure of the insurance sector to natural catastrophe perils, the American regulatory authorities are envisaging a project for the creation of a compensation scheme backed up by the federal government through pools offering larger covers.

The worst catastrophes in terms of victims in 2005
87 000
Earthquake (Mw 7.6 on Richter scale)Pakistan, India, Afghanistan
2 600
Earthquake (Mw 8.7 on Richter scale)Indonesia
2 030
Rain, mudslides, avalanches, three dams burstPakistan
1 600
Hurricanes Otis & StanMexico, Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica
1 193
Hurricane KatrinaUSA, Gulf of Mexico, Bahamas
1 150
Floods, landslidesIndia
* Dead and missing Source: Swiss RE
The most expensive catastrophes in 2005
in billions USD
24/08/200545Hurricane KatrinaUSA, Gulf of Mexico, Bahamas
20/09/200510Hurricane RitaUSA, Gulf of Mexico, Cuba
16/10/20058Hurricane WilmaUSA, Mexico, Jamaica, Haiti, Cuba
06/07/20052Hurricane DennisUSA, Cuba, Haiti, Caribbean
19/08/20051.9Floods, landslidesSwitzerland, Germany, Austria
08/01/20051.5Erwin stormDenmark, Sweden, United Kingdom, Norway, Germany
Source: Swiss RE
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