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Catastrophe Losses: Lucky in 2009, But Future Looks Bleak

The year 2009 has been tough on many people financially, but Mother Nature saw fit to give us a break. Studies by Munich Re, one of the world's largest insurers, and Aon Benfield, the world's largest insurance broker, both showed that natural catastrophes were way down this year - due mainly to a mild hurricane season off the Atlantic and Gulf coasts of the U.S.

Munich Re pegged insured losses for the year at $22 billion and total economic losses at $50 billion, while Aon, in the same ballpark, said insured losses were $20 billion.

Quite a blessing when you consider that over the past decade insured losses averaged $36 billion a year and total economic losses were $115 billion, according to Munich Re. But Munich Re isn't congratulating itself. Neither is it saying that it or any other insurer or government did anything to cause this outcome. On the contrary, the world's largest reinsurer is saying that climate change - and failure to do something about it - is likely to wreak havoc on the earth in the coming years.

Annual weather-related natural catastrophes on a global level have tripled since 1950, according to Torsten Jeworrek, a Munich Re board member responsible for its reinsurance business. And "climate change," the warming of the earth, likely accounts for a "significant share" of this. He took issue with the December Copenhagen climate summit, calling it "disappointing" that there was no breakthrough, particularly on greenhouse gas emissions that are blocking heat from escaping the atmosphere.

Aon's study points out that 2009 was the fifth warmest year on record, and marked the 32nd consecutive year of above average global temperatures.

"What we fail to do now will have a bearing for decades to come," warns Jeworrek. For insurers, whose money is on the line every time a hurricane hits, that warning is especially prescient.

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