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Science 12 August 2005:
Vol. 309. no. 5737, pp. 1040 - 1044
DOI: 10.1126/science.1112121
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Viewpoint

Insurance in a Climate of Change

Evan Mills*


Fig. 1. Global impacts of natural disasters from 1980 to 2004. Insured property losses are dominated by storm events due to risk-selection preferences of insurers and coverage of flood and crop exposures by public entities, and low penetration of earthquake insurance. Economic values are inflation-adjusted to 2004 levels. [Source: Munich Re, NatCatSERVICE] [View Larger Version of this Image (33K GIF file)]
 

Fig. 2. (A to D) Trends in (A) global numbers of weather-related events, (B) insured share, (C) variability of total losses, and (D) economic impacts and demographic drivers. Insured and total property losses ($45 billion and $107 billion in 2004, respectively) are rising faster than premiums, population, or economic growth. Data exclude health and life insurance premiums and losses. Non-inflation–adjusted economic data are shown in relation to GDP. Inflation-adjusted economic losses from catastrophic events rose by 8-fold between the 1960s and 1990s and insured losses by 17-fold (11). [Sources: Natural hazard statistics and losses from Munich Re, NatCatSERVICE; Premiums from Swiss Re, Sigma] [View Larger Version of this Image (25K GIF file)]
 

Fig. 3. Declining insurance industry capacity to absorb weather-related natural disasters. Curves show ratio of global weather-related property losses to total property/casualty premiums over the past quarter-century, indexed to average 1980 levels. [Sources as in Fig. 2] [View Larger Version of this Image (26K GIF file)]
 

Fig. 4. Lightning-related insurance losses increase with temperature (6). Each symbol represents monthly losses in the continental United States. [View Larger Version of this Image (13K GIF file)]
 

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