Reinsurer now expects net claims of $1bn
German reinsurer Munich Re has raised its loss estimate for February’s earthquake in Chile to $1bn after retrocession and before tax from the $700m it forecast at the end of April. The firm believes the total industry loss from the event will be in the order of $8bn.
The earthquake struck on 27 February, causing heavy losses and triggering a tsunami. Munich Re said providing a reliable forecast of the overall claims burden has been difficult so far because of low primary insurer retentions, the high proportion of facultatively reinsured production facilities and buildings, and ongoing business interruption losses.
The reinsurer added that the number of individual losses was also high, with local insurance companies receiving 190,000 claims notifications by the end of April.
Munich Re has kept its reinsurance claims estimate for European winter storm Xynthia at €70m. The firm has made provisions of €160m for the two Australian hailstorms in March.
Munich Re added that it expects the trend towards higher natural catastrophe costs to continue. It said exposure to geophysical events remains unchanged despite earthquakes in Haiti, Chile, Turkey and Costa Rica and volcanic eruptions in Iceland, Ecuador and Guatemala. However, increasing insured values have resulted in higher exposures over the years. In addition, Munich Re also expects the number and intensity of weather-related catastrophes to increase in the coming decades, largely because of climate change.