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The Cost of Natural Disasters

A survey conducted by Munich-Re - the world's largest reinsurance company- revealed that the natural catastrophes killed more than 20,000 people and cost more than USD 134 billion worldwide in 2013. Despite such dramatic and brutal figures it should be noted that this high human and economic cost is far below the average of the last decade which is USD 197 billion. The world's deadliest disaster in 2013 was Typhoon Haiyan which devastated the Philippine causing USD 10 billion in damage of which only USD 700 million was insured! It will come as no surprise to anyone that in developed countries where the insurance market is huge and profitable, a significant amount of the economic loss is borne by the insurance industry.On the contrary in most emerging countries where the insurance is almost non-existent, natural disasters have a significant impact on economic performance. For the first time in two decades Europe which faced devastating floods dominated the US in terms of damage. Nevertheless natural catastrophes should increase throughout the world in the next decades. And the scientific consensus is that climate change is happening mainly because of the human activities. And while it is today impossible to prevent the major natural disasters, their impact on populations and economies can be reduced and limited by building flood walls or undertaking a cleanup of rivers and streams. But the exorbitant costs of such works largely explain why many projects are being implemented after a disaster has already occurred. Finally the average cost of natural catastrophes could rise again this year due in particular to the extreme cold episode in North America. Yet, Nature has taken back its rights ignoring the data collected by the insurance companies !

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