Flash floods in Chennai last November caused economic losses of $2.2 billion

India's total economic losses from all disasters, natural and man-made, exceeded $6.2 bn in 2015

The flash floods in Chennai last November were the largest disaster, causing estimated economic losses of $ 2.2 billion, according to the latest sigma study by Swiss Re. India's total economic losses from all disasters, including natural and man-made events exceeded $6.2 billion (or 6.8 per cent of worldwide losses) in 2015

The study said insured losses were estimated at around $755 million, making these floods the second costliest insurance event in India on sigma records.

According to the study, India's total economic losses from all disasters, including natural and man-made events exceeded $6.2 billion (or 6.8 per cent of worldwide losses) in 2015, down from $13.4 billion (11.9 per cent of global losses) in 2014.

 

Total insured losses were $1 billion, up from $971 million the year before. Based on sigma criteria, there were 25 catastrophic events in India last year, up from 20 in 2014.

The severe flash floods in Chennai in November were the largest disaster, causing estimated economic losses of $2.2 billion. Insured losses were estimated at around $755 million, making these floods the second costliest insurance event in India on sigma records.

A large part of the losses originated from commercial lines. The event highlighted the vulnerability of rapidly growing urban areas to flash floods caused by heavy rains, said in the study.

It was further stated that, in India, uninsured losses from all catastrophes and man-made disasters were 84 per cent of the total losses in 2015, down from 93 per cent in 2014. Although the protection gap was smaller last year than in 2014, it was still high relative to global and regional standards. The global protection gap was around 60 per cent in 2015, down from 68 per cent in 2014. In Asia, the gap was at 81 per cent in 2015, down from 90 per cent in 2014.

Many cities in Northern India are located close to the seismic gap in the Himalayan range. A seismic gap is an area where plate movement has already produced land deformation but - as of yet - not released the associated energy in the form of an earthquake. The likelihood of earthquakes in seismic gaps is very high, and the expected magnitude of such an earthquake in the Himalayas is Mw 8.0-8.5. Many Indian cities, including the national capital, Delhi, are close to the gap and are vulnerable to earthquakes. According to the 2011 census data, around 90 per cent of Delhi's building stock falls in the category of unreinforced masonry, which is not earthquake-resistant, said in the report.

Swiss Re Group is a leading wholesale provider of reinsurance, insurance and other insurance-based forms of risk transfer.