A trend analysis of normalized insured damage from natural disasters
Produced as part of the The Munich Re programme: evaluating the economics of climate risks and opportunities in the insurance sector CCCEP research programme theme
Also known as Munich Re Technical Paper: 5
As the world becomes wealthier over time, inflation-adjusted insured damages from natural disasters go up as well.
This working paper analyses whether there is still a significant upward trend once insured natural disaster loss has been normalized.
By scaling up loss from past disasters, normalization adjusts for the fact that a disaster of equal strength will typically cause more damage nowadays than in past years because of wealth accumulation over time.
A trend analysis of normalized insured damage from natural disasters is not only of interest to the insurance industry, but can potentially be useful for attempts at detecting whether there has been an increase in the frequency and/or intensity of natural hazards, whether caused by natural climate variability or anthropogenic climate change.
We analyse trends at the global level over the period 1990 to 2008, over the period 1980 to 2008 for Germany, and 1973 to 2008 for the United States.
We find no significant trends at the global level, but we detect statistically significant upward trends in normalized insured losses from all non-geophysical disasters, as well as from certain specific disaster types in the United States and Germany.
Fabian Barthel and Eric Neumayer