A large number of tropical cyclones and the earthquake in Sichuan made 2008 one of the most devastating years on record, according to leading reinsurer Munich Re. The company is urging world leaders to recognize the effects of global warming and act now to create a climate agreement that will address the problem.

Although there was a drop in the number of loss-producing events compared with the previous year (from 960 to 750), individual catastrophes pushed up the numbers of victims and the losses appreciably. Throughout the world, more than 220,000 people died as a result of natural catastrophes this year. Overall losses totalled around US$ 200bn (2007: US$ 82bn) but were still below the record set in 2005 (US$ 232bn in current values). Insured losses in 2008 rose to US$ 45bn, about 50 per cent higher than in the previous year.

Driven by high losses from weather-related natural catastrophes, 2008 was — on the basis of figures adjusted for inflation — the third most expensive year on record, exceeded only by the hurricane year of 2005 and by 1995, the year of the Kobe earthquake. Torsten Jeworrek, member of Munich Re's Board of Management, noted: "This continues the long-term trend we have been observing. Climate change has already started and is very probably contributing to increasingly frequent weather extremes and ensuing natural catastrophes. These, in turn, generate greater and greater losses because the concentration of values in exposed areas, like regions on the coast, is also increasing further throughout the world." Munich Re is a world leader in terms of investigating risks from natural hazards of all kinds. "2008 has again shown how important it is for us to analyse risks like climate change in all their facets and to manage the business accordingly," said Jeworrek.

"For us as a leading reinsurer, the natural catastrophe trends of recent years have resulted in three action strategies, which we are resolutely pursuing," continues Jeworrek. "Firstly, we accept risks in our core business only at risk-adequate prices, so that if the exposure situation changes, we adjust the pricing structure. Secondly, with our expertise we develop new business opportunities in the context of climate protection and adaptation measures. Thirdly, in the international debate, we — as a company — press for effective and binding rules on CO2 emissions, so that climate change is curbed and future generations do not have to live with weather scenarios that are difficult to control." Munich Re performs scientific analyses on the effects of climate change and cooperates with many scientific institutes. In 2008, the company launched a cooperation with Professor Lord Nicholas Stern and the London School of Economics (LSE), the aim being to advance research into the economic impact of climate change.

Munich Re actively supports ambitious climate protection goals. This approach also opens up enormous opportunities because of the new technologies that emerge with very large growth potential. As a risk carrier with innovative coverage concepts in the field of alternative sources of energy (wind, solar, geothermal), Munich Re promotes these technologies and thus secures additional business potentials for itself. Board member Dr. Torsten Jeworrek: "The next climate summit in Copenhagen must quite clearly fix the route for reducing greenhouse gases by at least 50 per cent by 2050 with corresponding milestones. If we delay too long, it will be very costly for future generations."

For the full press release from Munich Re, click here.

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