The American Insurance Association (AIA) defines catastrophes
as "fortuitous events resulting in excess of $5 million in insured property damages, and having an effect upon a large number of insurers and insured." Included in this definition are earthquakes, floods, hurricanes, tornadoes, volcanic eruptions, tidal waves, and even asteroid collisions.
When fossil records point to the demise of a large number of species at roughly the same time, paleontologists often invoke a catastrophe
- whether a meteorite impact or a volcanic eruption - as the cause.
" Les inondations en Tunisie sont la cause de plus de 70% des deces dus aux catastrophes
et de plus de 60% de pertes economiques.
It continues, "Indeed, a question commonly posed by researchers and risk managers alike is whether natural catastrophes
are becoming more frequent and severe."
In its January 2012 renewals report, Catastrophes
, Cold Spots and Capital, reinsurance intermediary Guy Carpenter & Co.
To highlight the growing costs of these secondary perils, Swiss Re said, the combined insured losses from natural catastrophes
during 2017 and 2018 was $219 billion, which is the highest-ever total for a two-year period.
* Natural catastrophes
and man-made disasters had an economic cost of US$165 billion during 2018, with around US$155 billion resulting from natural catastrophes
and the remainder from man-made events.
While experts cannot tell us which disasters are attributable entirely to climate change, they have gone on record saying that the increasing frequency and severity of catastrophes
like those experienced in 2018 can, in fact, be linked to climate change.
Since 1970 Swiss Re's Economic Research and Consulting team collects data from various sources about natural catastrophes
and man-made disasters.
In this paper we concentrate on catastrophe
bonds, which are nowadays the most used solution to hedge the risk of catastrophes
through the capital markets.
According to a report released by AIR in November, global economic losses from catastrophes
average roughly USD 345 billion annually, of which less than 20% are insured.
In actuality, the credit quality of the rated catastrophe-linked notes is primarily linked to the defined risk of various natural catastrophes
, similar to that of catastrophe
bonds issued by a special-purpose vehicle that is sponsored by an insurance or reinsurance company.