Disaster insurance losses seen at $11B in 1st half

Natural disasters and severe weather caused insurers above-average losses of $11 billion in the first half of this year, with a winter storm in southwestern Europe and tornadoes in the U.S. incurring heavy costs, a leading reinsurer said Monday.

Munich Re AG said the costs between January and June were "somewhat above the average for the same period in the past 10 years" of about $10 billion.

Total economic losses, including losses not covered by insurance, were $25 billion, far below the average of $42 billion, Munich Re said. The number of people killed in natural disasters was 3,000 — compared with a 10-year average for the January-June period of 24,000.

However, many of this year's disasters so far hit relatively well-insured areas.

The most expensive single event was a winter storm which hit northeastern Spain and southwestern France in late January and caused insured losses of $2.3 billion, Munich Re said. Total economic losses were $3.8 billion.

That was followed by severe storms and tornadoes in the U.S. in mid-February, with insured losses of $1.35 billion; and another round of U.S. storms and tornadoes in early April, which cost insurers $990 million.

The deadliest disaster in the first half was May's Cyclone Aila, which hit Bangladesh and India and killed 320 people, Munich Re said. The company gave no figure for economic losses from the cyclone.

Aila was followed by the April 6 earthquake that hit L'Aquila in central Italy, killing 295 people. Munich Re put overall losses from the quake at $2.5 billion but said that, due to low insurance density, insured losses came to just $260 million.

Bush fires in Australia in February killed 173 people, causing total losses of $1.3 billion and insured losses of $770 million.

"Due to climate change [and] heat waves with long periods of drought ... the risk of such fires will further increase in [the] future," Peter Hoeppe, the head of Munich Re's risk research department, said in a statement.

The company noted that natural disaster losses are usually lower in the year's first six months than in the second half, when the annual hurricane season in the Caribbean and North Atlantic gets underway.

In its annual report in late December, Munich Re said insurers' losses from natural disasters for the whole of 2008 came to $45 billion, with two Caribbean hurricanes — Ike and Gustav — the most expensive.

Munich Re, a reinsurer, offers backup policies to companies writing primary insurance policies. Reinsurance helps spread risk so that the system can handle large losses from natural disasters.