Figure 8-1: The costs of
catastrophic weather events have exhibited a rapid upward trend in recent decades.
Yearly economic losses from large events increased 10.3-fold from US$4 billion
in the 1950s to US$40 billion per year in the 1990s (all in 1999 US$). The insured
portion of these losses rose from a negligible level to US$9.2 billion annually
during the same period, and the ratio of premiums to catastrophe losses fell by
two-thirds. Notably, costs are larger by a factor of 2 when losses from ordinary,
noncatastrophic weather-related events are included (e.g., as shown in Figure
8-6). The numbers generally include "captive" self-insurers but not the less-formal
types of self-insurance (Munich Re, 2000).