NU Online News Service, Dec. 16, 12:26 p.m. EST
The United States continued to be a source of insured catastrophe losses this year despite avoiding a hurricane landfall.
In its annual catastrophe report, global reinsurance intermediary Aon Benfield said severe weather and flooding created several $1 billion insured loss events in the states.
However, by far, the largest insured event in 2010 was the February earthquake in Chile, causing about $8.5 billion in insured losses--more than the next two highest insured loss events combined. Windstorm Xynthia, also in February, caused $3.65 billion in insured losses and the New Zealand earthquake in September produced $3.05 billion.
Worldwide, catastrophe activity was higher than the last three years, with 314 events causing nearly $38 billion in insured loss.
In 2009, 222 events produced $20 billion in insured losses.
Some of the worst natural catastrophes in the world in 2010 had little to no effect on insurers and reinsurers. Flooding in China and Pakistan as well as an earthquake in Haiti caused significant economic losses, but the insurance penetration in these areas is low. For instance, the floods in Pakistan caused $30 billion in economic losses but only $200 million in damages was insured, according to Aon Benfield.
Insured earthquake losses in Chile could have been much worse if insurance penetration, which is now about 1.2 percent, was higher, said the report. Still, this event was one of the most significant outside the U.S. ever, said Stephen Mildenhall, chief executive officer of Aon Benfield Analytics.
The top 10 events of the year accounted for more than 61 percent, or $22 billion, of the total insured losses. Four of the top 10 are events in the U.S.
Rates at the Jan. 1 reinsurance renewals will experience downward pressure as supply will continue to outpace demand, Mr. Mildenhall said.
"At year end 2010 reinsurer capital has grown to record high levels," he said, adding that reinsurance will remain a "highly accretive, cost-effective form of capital for our clients."
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