Last year has garnered major notoriety for the number and severity of natural disasters it played host to. 2011 has become widely recognized in the insurance industry as the costliest year in recent history in regards to natural disasters. While estimates varying regarding the total cost of disasters, Munich Re, a reinsurance and risk modeling organization, claims that 2011 generated more than $380 billion in worldwide insured losses, only a third of which was paid by insurance companies. The disasters have caused the global insurance industry to raise prices, but Munich Re suggests that the pricing surge may be due to climate change.
The issue of climate change is one embroiled in controversy. There are many arguments concerning the matter and many have yet to form any concrete opinions. Insurers, however, are disinclined to leave any significant amount of risk unaccounted for. Munich Re notes that the potential for climate change is quickly becoming a major factor in pricing insurance policies, especially for properties in areas prone to major natural catastrophes. According to Munich Re, insurers are taking climate change seriously regardless of whether the issue is true or false.
While 2011 had 150 fewer natural disasters than 2010, the damage caused by the 820 instances of disasters greatly overshadows the costs of previous years. The insurance industry may spur more awareness of climate and environmental issues in order to rein in on costs associated with disasters.