Fall 2013. As we observe the 1rst year anniversary of the tragic Hurricane Sandy, do you know what proportion of the economic loss due to Sandy was paid by taxpayers?
The answer is c) 88%. This is a record high for the US. 88%! (Sandy cost in the US: $68 billion). That proportion is more than any other disaster in American history. Hurricane Katrina was 50%. Hurricane Diane in the 1950s was only 6%.
(Sources: Recent research by Erwann Michel-Kerjan)
What proportion of residents in the affected areas had purchase flood insurance to protect their family in case of a flood?
A) All of them
B) Half of them
C) Only 2 out of 10
The answer is: C) only 2 out of 10. This is extremely low and raises the question of personal responsibility and affordability in a well-know flood prone area.
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HOW MUCH DISASTERS COST WORLDWIDE IN 2012?
A) $50 billion
b) $150 billion
c) $350 billion
The answer is b)–$150 billion. A large portion of these losses was due to Hurricane Sandy which hit the East coast of the United States in the fall of 2012 and cost about $80bn(see media section). This is less than the 2011 record high of about $350bn. More generally recent years account for several of the most costly disasters in recent history. But I have argues that more is to come. Are you prepared?
This section is updated every month with new facts that are easy to use by the printed, radio and TV media. Facts below should also be useful to all of you who don’t have time to read long research reports.
Did You Know?
How costly was the 1995 earthquake in Kobe, Japan? This quake killed over 6,000 people and cost nearly $100 billion (only $3 billion of which was covered by insurance).
Could the March 11, 2011 quake be more devastating? Early estimates as of March 14, 2011 indicate that it will be–well most likely it will be a large multiple of that.
How large are the December 2010 floods in Australia? 75% of Queensland has been declared disaster zone early in January, 2011. This is the equivalent of Texas and California, combined.
How many natural disasters occurred in the world in 2010? According to recent estimates (MunichRe), a total of 950 natural catastrophes were recorded last year, nine-tenths of which were weather-related events like storms and floods. As such the world suffered last year the second-highest number of natural catastrophes since 1980.
How much economic losses were triggered by natural disasters around the world in 2010? Losses from natural disasters more than doubled to $130 billion in 2010 from a year earlier.
- On terrorism threat …
- The terrorist attacks of September 11, 2001 cost the insurance industry $35 billion. Almost 10 years after 9/11, what proportion of large US corporations have purchased terrorism insurance?
Fact: A recent study done with Paul Raschky and Howard Kunreuther, shows that 60% of them had. But what about the 4 out of 10 companies which don’t have that coverage… Not sure what will happen to them if another large-scale attack hit us tomorrow.
- As of 2011, only 9 countries of the 34 member countries of the OECD had developed a terrorism insurance program based on a collaboration between the private sector and the nationla government. They are: Australia, Belgium, Denmark, France, Germany, Netherlands, Spain, the U.S.and the U.K.
- The State of Florida has seen its population grow from nearly 2 million in the 1950s to nearly 20 million today. What do you think is the estimated insurance value on the Florida coasts today?
Fact: It is about $3 trillion. No wonder why Florida might suffer major losses in the aftermath of the next hurricane or flood there.
- Florida is exposed to major flood risks from hurricane (so-called storm surge: storm pushing ocean water inland). Given that the flood risk is clearly known from everyone, how long do you think Floridians keep their flood insurance for?
Fact: In recent study done with Carolyn Kousky (RFF), we show that the average tenure is … 3 years only! Myopia, myopia…
On natural disasters …
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