Massive charges from natural disasters

From Chile to China, from Poland to Pakistan: the year 2010 was marked by severe earthquakes, floods and record temperatures. This change in underlying conditions also poses new challenges for insurers.

2010 – the year of catastrophes

The records of the reinsurer Munich Re paint a bleak picture of the past claim year. On average more than two catastrophes a day, more than a quarter of a million deaths, estimated total losses of 130 billion U.S. dollars – not including the flood damage in Australia at the turn of the year. This year’s catalogue of natural disasters is once again a sad one. In terms of both the amount and the number of losses, 2010 is above the mean of the last ten years. For the global insurance business, it is one of the years with the greatest losses of the last three decades.

In Central and Eastern Europe, mainly floods, hail, strong winds and heavy snow led to high losses. Especially in Poland and in the Czech Republic the Vienna Insurance Group has been burdened to an unusually high extent by the strong weather extremes, Thus, claim payments rose.

Change in underlying conditions

Over the past 30 years, the number of weather extremes observed has increased sharply. Catastrophic weather events, storms like Hurricanes Katrina or Kyrill, floods, as we experienced in 2010 in many parts of the world, or the heat wave in Russia and the forest fires in Israel.

Europe has been affected by the climate changes in different ways and to different degrees depending on the region. More extreme temperatures, less precipitation in the summer and a higher risk of flooding will probably continue to mark the climate in Central and Eastern Europe. In addition, an increased risk of forest fires and strong fluctuations in crop yields can be expected.

Currently, one can assume that this trend will also continue in the future. It is therefore important to adapt to these changing conditions by ensuring that all players work together to develop early warning systems, promote flood control or control water consumption in a targeted manner.

Insurance companies as risk experts in demand

The central idea behind the insurance business is to stabilise the financial situation of individuals and companies through benefits in the event of loss. If extreme weather leads to higher damages, the costs for it to be covered will also increase. By pooling the risks of many individuals and using diversification effects, insurance companies are better able to bear the risks and to protect affected parties from the ruinous consequences of those rare but often very destructive events. By virtually providing risks with a price tag, insurance companies also use incentives to prevent and minimise damage.

How VIG deals with and provides solutions for risk

The Vienna Insurance Group is an expert in analysing and evaluating risks. As such, it is engaged in the development of risk management systems and the formulation of measures for risk reduction. Together with other insurers, the Vienna Insurance Group helps make regions in many areas more resilient and more able to act in the event of natural disasters.

The insurance companies of the Vienna Insurance Group offer customers comprehensive coverage for damages caused by natural disasters such as floods, storms and snow loading. They themselves also take adequate precautions for claims that arise. The Vienna Insurance Group analyses the exposure to natural disaster risks in its insurance portfolios using the latest available natural hazards models and obtains coverage for its exposure, up to well above the 250-year events shown by the model, from the largest and most highly regarded reinsurers.

To be insured by a company of the Vienna Insurance Group means that customers will receive quick and uncomplicated help in the event of loss. This stated claim is behind many of the initiatives in the service area that have been successfully implemented by the companies of the Vienna Insurance Group. The services offered range from online claims reporting and professional telephone support to a severe weather warning service and tips for loss prevention.