Post-disaster loss estimates flawed: Munich Re
Loss estimates undertaken immediately after complex natural catastrophes are fraught with uncertainty, according to Munich Re.
In its annual review of the lessons learned from the previous year’s catastrophes, the German reinsurer says the very high natural catastrophe losses incurred in 2008 again show the crucial importance of risk research for the insurance industry.
Using the example of Hurricane Ike, which hit several Caribbean states, the US and even Canada at a cost of $US15 billion ($23.6 billion) last year, the report says the aggregate losses exceeded initial estimates by modelling firms and the industry.
“Since insurance companies’ first estimates were too low, Munich Re’s final claims burden was also higher than originally anticipated. Munich Re now expects a claims burden of approximately $US680 million ($1.07 billion) after retrocessions.
Board member Torsten Jeworrek says Hurricane Ike “clearly illustrates the importance of thorough risk research in identifying loss potential. It is this which enables us to explore new and continuously evolving risk complexes so as to render them manageable and push back the frontiers of insurability.”
Dr Jeworrek says Munich Re will “continue to insist on a commensurate price for the risks written, particularly since climate change and settlement dynamics will further increase losses due to weather-related natural catastrophes”.
The report says 2008 was the third most expensive year on record in terms of insured and economic losses. Insured natural catastrophe losses last year totalled $US45 billion ($70.8 billion).
In its annual review of the lessons learned from the previous year’s catastrophes, the German reinsurer says the very high natural catastrophe losses incurred in 2008 again show the crucial importance of risk research for the insurance industry.
Using the example of Hurricane Ike, which hit several Caribbean states, the US and even Canada at a cost of $US15 billion ($23.6 billion) last year, the report says the aggregate losses exceeded initial estimates by modelling firms and the industry.
“Since insurance companies’ first estimates were too low, Munich Re’s final claims burden was also higher than originally anticipated. Munich Re now expects a claims burden of approximately $US680 million ($1.07 billion) after retrocessions.
Board member Torsten Jeworrek says Hurricane Ike “clearly illustrates the importance of thorough risk research in identifying loss potential. It is this which enables us to explore new and continuously evolving risk complexes so as to render them manageable and push back the frontiers of insurability.”
Dr Jeworrek says Munich Re will “continue to insist on a commensurate price for the risks written, particularly since climate change and settlement dynamics will further increase losses due to weather-related natural catastrophes”.
The report says 2008 was the third most expensive year on record in terms of insured and economic losses. Insured natural catastrophe losses last year totalled $US45 billion ($70.8 billion).