Swiss Re’s annual Sigma study into natural catastrophes has reported a significant rise in the economic and insured costs for major disasters in 2010. However there is a call for the booming emerging economies to direct greater amounts of funding to disaster mitigation and to drive the creation of insurance markets to meet the threat.

As new figures showed that the Asian region was the worst hit for natural and man made disasters last year the Swiss Re Chief Economist Thomas Hess has called for a renewed focus on the level of preparedness in the region for natural disasters and that included greater levels of insurance.

The report by Swiss Re’s research arm Sigma reportedworldwide economic losses from natural and man-made catastrophes were estimated at $218 billion compared to the 2009, figure when losses totalled $68 billion. Asia was the hardest-hit region with total damages of approximately $75 billion. Pakistan and several large regions in China experienced extraordinary rainfall during the summer, resulting in devastating floods.

Thomas Hess, Chief Economist of Swiss Re, said: ”2010 was not only characterised by severe earthquakes that ranked among the deadliest, costliest and most powerful in history, but also by a series of extreme weather events, such as major floods. Some of these flood events sadly affected countries with poor emergency preparedness and underdeveloped insurance markets.”

He added: "These events show the urgent need to strongly improve prevention and post disaster management in order to reduce human suffering. The rapidly increasing wealth in emerging markets should also be used to address these problems. This wealth will also allow insurance to grow and close part of the large insurance protection gap in many emerging markets, the main reason why the financial protection against catastrophes is low in most emerging markets.”

The report found the cost of these global catastrophes to the insurance industry was in excess of $43 billion, an increase of more than 60% over the previous year. Approximately 304 000 people died in these events, the highest number since 1976.

“In 2010, severe catastrophes claimed significantly more lives than the previous year: around 304 000 were killed, compared to 15 000 in 2009,” It stated. “The deadliest event in 2010 was the Haiti earthquake in January, which claimed more than 222 000 lives. Nearly 56 000 people died during the summer heatwave in Russia. The summer floods in China and Pakistan also resulted in over 6 200 deaths.”

Natural catastrophes cost the global insurance industry roughly $40 billion in 2010, while man-made disasters triggered additional claims of more than $3 billion. By way of comparison, overall insured losses totalled $27 billion in 2009.

Lucia Bevere, one of the study’s authors, said: “Insured losses were highest in North America in 2010, where they exceeded $15 billion. Despite very low hurricane losses due to the absence of hurricanes making direct landfall in the US, a series of lesser storms throughout the year resulted in this high figure.”

Earthquake losses accounted for almost one third of all catastrophe losses in 2010. The February 2010 earthquake in Chile and the September earthquake in New Zealand were the two costliest events in 2010, and led to insured losses estimated at $8 billion and $4.4 billion respectively. Overall natural catastrophe claims in 2010 were in line with the 10-year average due to unusually modest US hurricane losses and in spite of notably high earthquake losses.

It adds that with just three months of the year gone earthquake losses for 2011 will also be above average as the total insured claims for the February 22 earthquake in Christ-church, New Zealand, are estimated to be between $6 billion and “12 billion, while the Tohoku earthquake that struck Sendai, Japan on March 11 is “expected to trigger significant insured losses”.

Another of the study’s authors, Balz Grollimund, added: “Although no long-term trend of increasing global earthquake activity has emerged, the number of fatalities and insured losses from earthquakes are on the rise. The main reasons are population growth, the higher number of people living in urban areas as well as rising wealth and rapidly increasing exposures. Many of these rapidly growing urban areas are located in seismically active areas.”

The study found that there wereten events that triggered insured losses of $1 billion or more. The two biggest insured losses were caused by earthquakes – the February earthquake in Chile and the September earthquake in Christchurch, New Zealand. The third costliest event was winter storm Xynthia in Western Europe, which led to insured losses of $2.8 billion. Three storms in the US and two storms in Australia also generated losses of over $1 billion. Property claims from the Deepwater Horizon explosion in the Gulf of Mexico are estimated at $1 billion. However given the complexity of the claims, the latter figure is still subject to substantial uncertainty, with the overall insurance loss expected to be higher, as liability losses are not included in the sigma numbers.