The Costliest Disasters to the Insurance Industry

The 9/11 attacks are the most costly man-made disaster recorded in modern history, at least if you look at them from the perspective of the insurance industry. The attacks against the World Trade Center, the Pentagon and other buildings in the U.S. cost more than $25 billion dollars in insured damages, according to numbers published by the Insurance Information Institute.

Compared with the most costly natural disasters in terms of insured losses, the 9/11 attacks still come eighth, showing the massive scale of the event that killed almost 3,000 people and transformed New York City for years.

Hurricanes dominate the biggest insured losses caused by natural disasters, especially those which hit the United States. The costliest among them was Hurricane Katrina, which caused insured losses of more than $60 billion in 2005. Earthquakes (and the tsunamis that they can cause) are rarer, but also have the potential to be devastating, as the appearance of the 2011 earthquake and tsunami in Japan and the Christchurch earthquake in New Zealand among the top 10 show. Again, developed countries typically incur bigger insured losses. For example, the 2008 earthquake in Sichuan, China, cost $85 billion in overall losses - more than Hurricane Sandy - out of which only $300 million were insured.

While the chart distinguished between natural and man-made disasters, that line is becoming more blurred for atmospheric catastrophic events. The human impact on global climate is manifesting itself in the form of more frequent extreme weather events. Three hurricanes of the 2017 season among the costliest disasters to the insurance industry are a testament to that.