The Intelligent Quarterly from the publishers of The Insurance Insider

Winter 2011 / 2012

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For anyone involved in the disaster "business", 2011 will be a year to remember, or - more likely - one to forget.

Never before has nature exacted such a toll of carnage on human society, with earthquakes, tsunamis, floods, tornadoes and tropical cyclones constantly vying with one another for the limelight.

Increasingly, in recent years, the transition from one year to the next has coincided with some major catastrophe or another. In 2003 it was a massive earthquake that obliterated the ancient Iranian city of Bam. Just a year later it was the turn of Indonesia, where one of the largest seismic shocks ever recorded shook northern Sumatra to its roots and spawned a tsunami that killed more than 230,000 people from more than 50 countries, including 9,000 tourists. In 2010, the advent of the New Year saw the Haitian capital Port-au-Prince flattened by yet another quake, taking somewhere between 50,000 and 100,000 lives.

It was hardly a surprise then that 2011 also started with a bang. This time it was Australia's turn, and the culprit this time was too much water. Notwithstanding its "sunshine state" epithet, it does sometimes rain in the Australian east coast state of Queensland and even floods are not unknown. Nothing, however, could have prepared the people and authorities of the city of Brisbane and its surroundings for the volume of water that began to inundate the region in late November, and which peaked in the early days of this year.

The combination of Tropical Cyclone Tasha, the strongest La Niña since 1973, and unusually high sea surface temperatures off the coast caused record rainfall across Queensland's river catchments and ultimately led to the overtopping of the Brisbane and other major rivers. At the height of the floods, more than half of the state was affected, including Brisbane itself and at least 70 other urban centres.

As ever, it is always difficult to put a finger on a single catastrophic event and say that anthropogenic climate change was responsible. Nevertheless, at least one eminent climate scientist has argued that progressive warming of the adjacent ocean played a key role by providing a ready source of extra water vapour.

Quaking all over

Barely five weeks after the Queensland floods peaked, while the 200,000 or so residents affected were still mopping up and the government was contemplating the enormous economic cost of the event, estimated to be around $30bn, came the turn of Australia's southern neighbour. Following on from a damaging quake the previous year, the southern New Zealand city of Christchurch was once again seriously shaken in late February.

A magnitude 6.3 shock close to the city centre and at the shallow depth of just 5km caused massive damage - partly due to the fact that buildings were already weakened by the previous event, but mainly due to the extraordinarily violent ground shaking and the liquefaction of huge tracts of downtown Christchurch.

The loss of 181 lives and a total cost, including rebuilding, as high as $20bn or more, provide testimony to one of the worst natural disasters in the country's history and one of the biggest insured earthquake losses ever.

Next stop on the 2011 disaster trail was 10,000 kilometres to the north, where in early March a colossal submarine earthquake struck off the east coast of northern Japan, dwarfing the Christchurch shock. Registering a magnitude of 9.0, this megathrust quake triggered a major tsunami that surged across the flat, exposed, terrain of the Iwate Prefecture within minutes. Entire towns vanished beneath walls of unstoppable water up to 10 metres high that ended more than 15,000 lives in seconds.

Failure by the authorities to plan for a quake of this size led to tsunami defences being overwhelmed, causing a massive release of radiation at an inadequately protected nuclear power plant and power cuts in the capital. At an estimated economic cost of more than $300bn, the quake and tsunami make up the most expensive natural catastrophe ever; three times larger than the 1995 Kobe earthquake, which now sits at number two in the list.

Fire and flood

And so the world's most disastrous year continued. In April and May the United States became the focus of nature's wrath, with torrential rains bringing the worst flooding for at least a century to the Mississippi and its tributaries. Floodwaters spread across seven states, taking close to 40 lives and swamping dozens of communities. Only through opening spill-ways and blasting gaps in the protective levees to allow inundation of rural areas were cities like Cairo and Baton Rouge saved from being deluged.

The storms that brought this $5bn one-in-500-year flood also contributed to one of the worst tornado outbreaks in the nation's history. More than 1,000 tornadoes throughout April and May took more than 500 lives, including over 300 on 27 April alone.

While things have quietened down somewhat, tornadic storms continue to march periodically across the flat landscape of the Midwest's Tornado Alley, with more than 1,800 twisters reported as of early November. The death toll now stands at 549 - just 15 less than the combined US tornado death total for the previous 10 years. The financial cost, too, is unprecedented, amounting to somewhere between $20bn and $25bn.

Meanwhile, in the Southwest, a devastating drought, which may yet cause 1930s-style dust-bowl conditions, contributed to the unprecedented wildfires that raged across Texas in September, razing more than 1,500 homes and taking 40 lives.

While the Atlantic hurricane season has, on the whole, been a quiet one, the arrival of Hurricane Irene off the east coast in August added to the disaster woes of the US, leading to economic losses of around $10bn.

Along with the floods and tornadoes, Irene was just one of a record 14 natural catastrophes in the US this year that cost more than $1bn, the latest being the early snowstorms that hit the Northeast in late October. This dismal picture is emphasized by the fact that President Obama has - so far this year - declared a record 90 disasters.

Monsoon season

While the US has had a tough time, Europe has been let off relatively lightly. The same cannot be said, however, for South and Southeast Asia. For the second year running, monsoon rains in July and August brought flooding to Pakistan on a biblical scale, affecting 20 million people and inundating fully one fifth of the entire country.

China, too, succumbed to devastating summer floods - as now seems to happen every year - affecting 36 million people. Neighbouring Thailand suffered too, with floodwaters driven by exceptional monsoon rains steadily encroaching on the capital, Bangkok, and continuing to threaten a breakthrough into the downtown area.

All in all, 2011 has been an astonishing year that has seen disaster-related records tumble like ninepins. Not only did this year see the costliest natural catastrophe ever and the most billion-dollar events, but also the biggest annual losses due to weather-related catastrophes and was the most expensive year ever for natural disasters. Having surpassed 2005, which saw natural disasters costing some $220bn, it looks as if the figure for this year could easily top an incredible $400bn.

What is really scary, however, is that things are likely to get far worse, with a combination of climate change and the increasing concentration of people and wealth in hazard zones setting the scene for even bigger losses going forward. There has been much hype recently about the fulfilment of a (falsely alleged) Mayan prophecy that the world will end next year. Surely 2012 is not going to be quite that disastrous - or is it?

Bill McGuire is professor of Geophysical and Climate Hazards at University College London