Natural disasters include earthquakes, volcanic eruptions, fires, floods, hurricanes, tropical storms, cyclones, landslides and other events that cause loss of life and livelihoods. It is estimated that almost 3 million people have perished as a result of natural disasters in the past three decades while tens of millions have suffered hardship (UN 1997).
Things appear to be getting worse, in two ways: natural disasters appear to be becoming more frequent and their effects more severe. The Munich Reinsurance Company estimates that total global economic losses from natural disasters for the two years 1997 and 1998 reached US$120 000 million. Allowing for inflation, losses over the decade 1986-95 were eight times higher than in the 1960s (Munich Re 1997 and 1998).
Overall, the poor are the most likely to suffer from major disasters and the least likely to be insured against loss. In 1997, Asia suffered 33 per cent of the world's catastrophic events, 67 per cent of the casualties and 28 per cent of the economic losses. However, only 0.2 per cent of those losses were covered by insurance policies. The global insurance industry paid out US$4 500 million for disaster-related damage in 1997, and 66 per cent of the claims were made in the United States (Munich Re 1998). Thus insured losses and repayments are concentrated mainly in the richer industrialized countries.