Weather-Related Catastrophes Push Insurance Losses to New Heights

2008 was the third most expensive year for the insurance industry due to catastrophe damage, which insurers say is attributed to climate change.

Munich Re, one of the world’s biggest insurers, cited weather-related catastrophes as reasons for $200 billion in losses during the year, compared with $82 billion in 2007.

There were 50 percent more insured losses ($45 billion) than last year, with Hurricane Ike being the most expensive. Moreover, about 220,000 people lost their lives because of natural catastrophes, Munich said.

While 70,000 of those were from the earthquake in China’s Sichuan province, 135,000 were from the cyclone Nargis in Burma, where deforestation allowed a storm surge to reach further inland.

Both hurricanes and tornadoes were particularly frequent and severe in 2008, and it was the planet’s 10th-warmest year on record. Insurers say the loss statistics fit the pattern of their climate models – that is, atmospheric warming causes weather to “run in top gear,” therefore producing storms.

Insurers now incorporate climate change patterns into their risk modeling,  which subsequently impacts their financial performance, writes the Financial Times.

Providers and regulatory bodies are still trying figure out what information about climate change insurance companies should be required to report.