MUNICH RE SEES LONG-TERM DEMAND FOR REINSURANCE

German reinsurer Munich Re has said that a resurgence in the number of natural catastrophes would generate long-term demand for reinsurance cover and support higher rates, despite it being a very good year for catastrophe reinsurers in 2006. Losses on catastrophes last year amounted to an estimated $45bn, about 20% of the total losses in 2005 and less than the losses generated by a single event, hurricane Katrina, that year. Munich Re board member Torsten Jeworrek said the reinsurer saw “the price increases that followed the hurricane year 2005 as enduring”. But for 2006, insured losses due to tropical cyclones amounted to only $250m, down from $87bn in 2005. Munich Re claimed that an increase in dust particles in the Sahara absorbed solar radiation and hindered the formation of hurricanes in August. In Asia the damage caused by cyclones was up, with insured losses of $1.5bn dwarfed by economic losses of $15bn. Munich Re warned that cyclone Larry, which hit Queensland in March, was “a sign of things to come”, and that if the storm had hit a more populated area of Brisbane the insured losses would have been significantly higher than the recorded US$400m. Munich Re said that it would be releasing a new earthquake risk model for south-eastern Asia in the first half of this year. Meanwhile Munich re reiterated its previous warnings against population over-concentration, stating that megacities brought megarisks.