Vanguard (Lagos)

Nigeria: Insurers, Reinsurers Predict Catastrophic Losses in Global Warming

Against the backdrop of increasing meteorological forecasts that the weather condition is going to get increasingly worse, both local and international insurance operators have predicted more losses to the market as a result of the expected catastrophic events .

Apart from the January 27, 2002 explosion in Nigeria, September 11, 2002 in US, floods, earthquakes and erosions, insurance practitioners worldwide say more natural disasters such as the recent floods in India, could spring up as a result of the change in the weather just as they advised their clients to be cautious about the forecasts.

Managing Director of Continental Reinsurance Plc, Mr Adeyemo Adejumo envisioned that insurance industry worldwide cannot run away from settling claims on major catastrophes that would affect their clients arising from environmental change.

Adejumo said such contingencies are the more reason why insurance and reinsurance companies should at all times be prepared to meet their obligations to the insured when such disasters occurred.

Director-General of the Nigerian Insurers Association (NIA), Mr Ezekiel Chiejina in his contribution, stated that catastrophes could come in two forms natural and man-made as he recalled the January 27, 2002 explosion which he said, compelled the sector to spend N458million on claims, out of the of N685,014,885.61 adjusted claims paid to 223 claimants.

Before the adjustment was made, Chiejina disclosed that insurance companies, particularly, members of the NIA, had reported claims of 311 involving N2.5billion from 12 textile manufacturers; 7 pharmaceuticals, among others.

In the same vein, Munich Re and Swiss Re also foresaw an increase and severity in major catastrophes that would result in increase in insured losses.

The two international reinsurers predicted that El-nino was likely to peak in Europe before the end of this year. Munich Re for instance, relayed that the catastrophe that had happen in the last one decade could not be compare with those that had occurred in 1960s. The reinsurer said the number of natural disasters in recent times was 2.6 times larger.

MunichRe in its review of 2002 major catastrophe, put insured losses at nearly $13billion, compared to $11.5billion in 2001 while economic losses recorded was $55billion in the year under review against $35billion estimated in 2001.

Meanwhile, Swiss Re sigma study of natural catastrophe and man-made disasters in 2002 predicted that climate change would produce what it called, "an increasing number of extreme weather events" mainly arising from heavy rainfall

Swiss Re said," the increasing number of floods are consistent with developments that Climatologists expect to find in a warmer climate"

Insured losses following such disasters, the reinsurer noted, had risen over the past 30 years because of the "increase in insured values, their concentration in highly exposed areas and their susceptibility to external influences"

Swiss Re in its 2002 accounts disclosed that natural disasters cost non-life insurer $13.5billion, though this figure it stated, was below the $35billion recorded in 2001and slightly less than the annual average recorded between 1978 - 2001.

It revealed that storm losses in 2002 stood at $6.7billion; man-made losses was $2.1billion while floods cost insurers $3.2billion as a result of severe flooding in Europe.

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