Tag Archives: earthquake

The High cost of Natural Catastrophes

Natural catastrophes cost about $39.5 billion in 2016. This figure is higher than the previous highest record of $60 billion in 2012.

The above information excludes man-made disasters. Between 2011 up until 2015 the losses were $120 billion to $23 billion respectively.

The regions show low insurance penetration as the economic losses in the regions are much higher.

Winter storm Jonas was called the storm of the century. This is only one of the natural catastrophes that cost approximately $1 billion in damages. Airports near Baltimore had snow reaching a height of 74 cms. Glengary, West Virginia had 107 cms of snow. As a result 49 people died due to car accidents and hypothermia.

A 6.4 magnitude earthquake in Taiwan killed 116 people. The fatalities were caused by the collapse of a high-rise building. NT$25 billion was allocated for reconstruction.

In August 2016 565,070 acres of land had been burned in California. The Blue Cut fire cost Southern California’s shipping industry $1 million dollars per day.

Louisiana had a flood when six rivers broke a record on the water level. Another one of the natural catastrophes that took the lives of thirteen people. The estimated cost of this flood is in the region of $8 billion.

Another catastrophe occurred in August 2016 when Central Italy was shaken by a 6.22 magnitude quake.  As a result 240 people were killed. The cost of this disaster is estimated at 34 million Euros.

In November 2016 New Zealand had a 7.8 magnitude quake near Christchurch. Hence two hours after the quake, tsunami waves over 3 meters in height pounded the coast. Prime Minister John Key expected the damage to run into a couple of billion New Zealand dollars.

Japan was rocked by a 6.9 quake on November 21, 2016. The Fukushima’s quake was initially measured at 7.3 but later downgraded to 6.9. This area was rocked by a devastating quake in 2011 from which the residents have not yet recovered. The cost of this quake has not yet been fully calculated.

Nepal Earthquake

The Nepal earthquake struck on 26 April 2015 caused about $2 billion in economic losses in the country.  Only a fraction of the cost will be incurred by insurers, according to Kinetic Analysis Corporation. Gorkha district was the epicenter of the 7.8 earthquake.

The Nepal earthquake triggered an avalanche on Mount Everest that killed 17 people,making it the deadliest day in the history of climbing on the world’s highest peak.

The rush of ice and snow swept through the base camp where climbers were preparing to ascend the mountain.

Damage in India could cost an additional $800 million.  This is according to figures from the disaster-modeling firm that include property damage and long-term business interruption costs. Less than 1 percent of the losses are covered by insurance. The estimates exclude costs for immediate needs such as food.

Chuck Watson from Kinetic said that most developing countries do not really have mature insurance industries. The magnitude 7.8 earthquake and aftershocks killed more than 4, 000 people. Million were displaced from their homes.

Nepal has a gross domestic product that is smaller than any of the 50 US states. Its 28 million people have the lowest spending power of any Asian country apart from Afghanistan.

Nepal’s insurers collected premiums of about $277 million in 2013.  Most of those funds were for life coverage. Spending on property-casualty coverage, such as auto and home insurance, is less than $4 per capita annually in Nepal. This is compared with almost $2,300 in the United States.

The costliness earthquake for the industry was in 2011.   More than 15,000 people were killed and insurers had losses of about $40 billion in Japan.

The Government’s Safe Travel website has upgraded the risk of travelling to Nepal to “high” and advised against all “tourist and other non-essential travel”.

Southern Cross Travel Insurance customers have been warned that those who choose to travel while the warning remains in place will not be covered against any claims incurred as a result of the earthquake.

The earthquake has led to a surge at websites offering policies to cover homes and their contents. Such policies are of two types. One covers the structure and construction costs. This is in the event of damage to the property due to natural calamities.  The other insures belongings and household contents.

A similar spike in demand was experienced during the Jammu and Kashmir floods, the Uttarakhand floods and the Sikkim earthquake.