The Largest Insurance Claims in History

Published by Marshall & Gibson Lawyers on the 30 December 2012

When disasters occur, whether natural or man-made, we count the cost of human life above all else. But huge disasters also have huge economic consequences and insurers are often the first to feel the effects of these events. The following are some of the world’s biggest catastrophes, which resulted in some of the largest insurance claims in history.

September 11

In 2001, terrorist attacks destroyed the World Trade Centre’s Twin Towers in New York, killing almost 3,000 people and costing insurance companies around $40 billion in claims. These included claims for business interruption, life insurance, liability insurance, property damage, vehicle damage, aviation liability and workers compensation.

Hurricane Katrina

In 2005, Hurricane Katrina hit the coast of New Orleans, claiming more than 1,800 lives and causing major devastation. Insurance companies paid out more than $71 billion in claims. Almost half of the people whose homes were damaged or destroyed did not have flood insurance.

Indonesian tsunami

On Boxing Day 2004, an undersea earthquake caused a massive tsunami in the Indian Ocean. Indonesia was worst hit, with around 170,000 deaths. Property claims cost insurers around $1.3 billion, life and health insurance around $250 million and travel insurance claims approximated $50 million. But this was a drop in the bucket compared to the economic losses, estimated to be around 50 per cent of the region’s economy.

Japanese earthquake and tsunami

Japan’s combined earthquake, tsunami and nuclear crisis in March 2011 was possibly the most costly disaster in history. It claimed the lives of nearly 16,000 people, cost insurers some $35 billion and produced an overall economic loss for Japan of $210 billion.

Christchurch earthquakes

While not the biggest disaster on record by any means, the Christchurch NZ earthquakes in 2011 were possibly the most costly ever for insurers per head of population, due to the high proportion of people with earthquake insurance. The earthquakes in February and June caused economic losses of $18 billion and this was closely followed by losses to insurers of $14 billion.

While insurance companies often bear huge losses when disasters strike, the amount they pay is often nothing compared to the uninsured losses suffered by the affected communities. For example, the earthquake in Kobe, Japan in 1995 cost insurers $5 billion, but the region’s uninsured losses were many times that at around $95 billion.

The main factor influencing insurer payouts is the number of people insured, so the impact of disasters will always be greater in developing countries, where people can barely afford to put food on their tables, let alone take out insurance policies.

Sometimes, insurance companies refuse to pay out at all after disasters, as occurred after the major flooding in Brisbane and south-east Queensland in 2011. Many insurance companies rejected the claims of those with flood insurance, saying they were only covered for flooding resulting from precipitation and not for ‘riverine flooding’.

If you have suffered injury or property damage as a result of a natural disaster and have had your claim rejected, you should contact a compensation lawyer to examine your options. Hiring no win no fee lawyers is often the best course of action in such circumstances.