Homeland Security Watch

News and analysis of critical issues in homeland security

April 2, 2012

Catastrophic losses: 2011 most expensive

Filed under: Catastrophes,Preparedness and Response,Strategy — by Philip J. Palin on April 2, 2012

Last week Zurich Re(insurance) released its annual survey of catastrophes. Given events in Japan and Thailand, none of us are surprised it was a bad year.   In terms of total economic loss (above) it was the worst year on record.  The total insured loss was a bit less than 2005 when hurricane’s Katrina, Rita, and Wilma hit the United States.   Compared to most industrial and post-industrial nations, Japan has a low rate of insurance penetration.

Neither economic nor insured losses capture the full range of catastrophic events.  The continuing drought and famine in the Horn of Africa is not featured in the report. Four other examples that are under represented by financial data:

The report includes a special section on the Thai flooding.   According to the report,

The size of the Thailand flood loss came as a shock to the insurance industry. Although Thailand had been known for being prone to flooding, less known was the large amount of exposure that had built up in Thailand in recent years, most of which originated from foreign companies that had diverted their manufacturing operations there…

The Thailand flood is a textbook example of how a natural catastrophe can cause extreme property loss accumulations… a large affected area, high intensities, long duration, high concentration of property values, high insurance penetration, high vulnerability of insured goods, and insufficient protection and preparedness.

Concentrations of population, wealth, and the systems on which population and wealth depend are increasingly fat targets for natural, accidental, and intentional hazards.

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Comment by William R. Cumming

April 2, 2012 @ 4:17 am

Perhaps the supply chain disruptions of the Japanese earthquake and Thai flooding will be studied in detail and lessons learned? Perhaps not!

Comment by Philip J. Palin

April 2, 2012 @ 4:45 am

Bill, The following is from the Zurich Re report:

Recent events have highlighted the importance of supply chains… Small and mid-sized countries such as Thailand are growing in importance in the global supply chain. The flooding has highlighted the insurance industry’s need for a fuller understanding of its exposure to supply chain risk, via more detailed information from clients and aggregation risk management with appropriate limits and premiums.

My private sector colleagues report that this process is already well-underway.

Pingback by International Report on Catastrophic Losses in 2011 « Recovery Diva

April 2, 2012 @ 5:45 am

[…] suggest you read the blog by Phil Palin in Homeland Security Watch today about huge losses in nations around the globe in 2011. I found the dicussion of the major […]

Comment by William R. Cumming

April 2, 2012 @ 7:33 am

Thanks Phil!

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