2010 Global Catastrophe Losses Recap

2010 was a banner year for catastrophe’s around the world. According to behemoth reinsurer, Munich Re, 2010 was the worst year for catastrophe losses since 1980. “…a total of 950 natural catastrophes were recorded last year.” Munich Re estimates total insured losses to be about $37 billion. The good news for us on the east coast of the United States is that we were spared this hurricane season. No major hurricane hit the United States in 2010 even though there were 12 Atlantic hurricanes.

Earthquakes dominated the catastrophe list in 2010. Starting with the 6.5 quake in California and 7.0 quake in Haiti. According to National Underwriter, the insured claims from Haiti were insignificant. These followed with quakes in Chile (8.8); Taiwan, Turkey, and New Zealand. 2010 also saw it share of flooding and storms. A winter storm in Europe, Xynthia caused $4 billion in insured losses according to National Underwriter.

Overall the property & casualty insurance companies were profitable in 2010. Insurance Services Office, of New Jersey reported that net income increased 62% for the first nine months of last year. We certainly want a healthy insurance industry but I cannot help but wonder why the large insurance companies cry poor but make excessive profits. Of the total losses sustained in 2010 from catastrophes, only about a third was insured. Why are the companies so gun shy to insure damage from hurricanes on the coastal areas of the United States and when they do, they charge excessive premiums. What are they doing with those premium dollars since there weren’t any hurricane related claims in 2010? One would certainly hope that they’re saving that money for future years and would offer discounts to policyholders. But that would be too much to ask.