2011: the costliest year in natural disasters in recorded history

According to recent report by Business LIVE, 2011 was the most expensive year in recorded history in terms of natural disasters. More than $310 billion of damage were incurred in the first nine months alone. Of that, $80 billion was insured; twice as much as last year.

Thailand experienced heavy rains leading to floods recently, which adds to the cost of Australia’s Storm Yasi , Hurricane Irene in the United States and wildfires and winter storms in Texas. To counter the costs of the losses, insurance companies are developing principles for sustainable insurance. The idea is to get local governments and communities to reverse the effects of expanding human settlements.

The South African Insurance Association, too, has developed a Strategic Risk Forum to discuss potential risks and ways of addressing them. The global insurance industry is looking for ways for public and private partnerships to reduce the effects and likelihood of environmental disasters, otherwise buildings insurance for such perils will be unlikely to continue.

The Eden District Study

The World Wildlife Fund’s biodiversity unit conducted a study in the Eden Disrict of the Southern Cape to determine the extent of human-induced changes on the landscape and its relation to natural disasters. According to the sturdy, 80% of insurance claims in the last five years were related to weather. While most natural perils are not a result of human intervention, the study showed that changes to the landscape and the spread of invasive alien trees had an equal effect on risk exposure.

More studies will need to be conducted to see how other forces have an effect on disaster. Once these studies have been conducted, insurance companies, business and communities can partner to build better preventative measures to reduce the insurance effects of natural disasters.

For more information, visit Business Live.