Financial Times (London, U.K.), December 30, 2008


[Rachel's introduction: The re-insurance company Munich Re reports that weather-related catastrophes helped push losses to $200 billion in 2008, compared with $82 billion in 2007.]

By James Wilson in Frankfurt and Andrea Felsted in London

Financial damage and loss of life caused by natural disasters made 2008 one of the most devastating years on record and showed the impact of climate change, one of the world's biggest reinsurers said yesterday.

Munich Re said weather-related catastrophes helped push losses to $200bn compared with $82bn in 2007.

Insured losses of $45bn were 50 per cent more than in the previous year.

This made 2008 the third most expensive year to the industry for catastrophe damage, continuing a long-term trend, the group said.

"Climate change has already started and is very probably contributing to increasingly frequent weather extremes and ensuing natural catastrophes," said Torsten Jeworrek, a member of Munich Re's executive board.

Insurance companies are concerned by the impact of climate change on risk modelling and hence on financial performance.

Munich Re said the next UN climate summit, scheduled for late next year in Copenhagen, needed to "quite clearly fix the route" to halve output of greenhouse gases by 2050.

More than 220,000 people are estimated to have been killed by natural catastrophes during the year, including 135,000 in Burma during cyclone Nargis, where deforestation allowed a storm surge to reach further inland, said Munich Re.

Hurricane Ike was the year's most expensive event for insurers, with $15bn of insured losses.

The year was the fourth-worst hurricane season since reliable data have been compiled, while the US tornado season was "unusually severe", Munich Re said. It was also the planet's 10th-warmest recorded year. All have occurred in the past 12 years.

"The loss statistics for 2008 fit the pattern that the calculations of climate models lead us to expect," said Peter Hoppe, the reinsurer's head of geo-risks research.

Atmospheric warming meant "the weather machine runs in top gear".

But the number of "loss-producing events" fell compared with 2007, Munich Re said.

The year's death toll included 70,000 in the earthquake that hit China's Sichuan province in May.

Munich's figures echo those of Swiss Re, which put insured losses from natural catastrophes at $43bn, of which Ike accounted for $20bn.

But Swiss Re estimates that there was another $7bn of insured losses from man-made disasters, taking total insured losses to over $50bn.

Copyright The Financial Times Limited 2008