Natural disasters

RECENT NEWS
New York Times  Sep 1  Comment 
Mobile alerts and free tools can notify you and help you prepare for emergencies including extreme weather, natural disasters and other crisis situations.
MarketWatch  Aug 26  Comment 
The shelters are designed to protect against everything from natural disasters to home invasions and ISIS attacks.
MarketWatch  Aug 25  Comment 
Sales volume and price appreciation have been greater in lower-risk areas, according to one real estate data provider.
Clusterstock  Aug 25  Comment 
Most people would rather not buy homes in a known dangerous area, especially when the risks can't be removed. Attom Data Solutions looked into how exposed over 3,000 US counties are to six natural hazards: earthquakes, floods, hurricane storm...
Insurance Journal  Aug 24  Comment 
A 20-foot-long drone that was brought to North Dakota to test precision agriculture methods is now part of a trial run to see if can help crews restore power to areas hit by natural disasters. The Israeli-manufactured Elbit Systems Hermes …
Insurance Journal  Aug 19  Comment 
Calling the recent flooding event in Louisiana one of the most significant natural disasters in the United States, catastrophe modelling firm RMS said flood insurance participation is low in the parishes most affected by floods. Flooding since...
The Hindu Business Line  Aug 15  Comment 
With 1.5 lakh lives lost each year, road accidents kill more people in India than terrorism or natural disasters. There’s now a new law in the making to address this problem in the form of the Motor V...
Insurance Journal  Aug 9  Comment 
Munich Re, the world’s second-biggest reinsurer, reported second-quarter profit that beat analysts’ expectations as gains from currencies and investments cushioned higher claims from natural disasters and restructuring charges at its Ergo...
Financial Times  Aug 5  Comment 
German insurer suffers higher claims for natural disasters
Financial Times  Jul 29  Comment 
Reinsurer’s net profits fall by almost a fifth after floods and fires contribute to claims surge




 
TOP CONTRIBUTORS

A natural disaster is the consequence of a natural hazard (e.g. hurricane, volcanic eruption, earthquake, landslide) which moves from potential in to an active phase, and as a result affects human activities[1]. Business is one such activity.

The International Red Cross, which publishes an annual World Disasters Report, says the economic cost of natural disasters has skyrocketed. In the past two decades alone, direct economic losses from natural disasters multiplied five fold to US$629 billion. Annual direct losses from weather-related events increased from an estimated $3.9 billion in the 1950s to $63 billion in the 1990s[2].

Natural disasters tend to affect insurance companies as well as local businesses affected by the disaster. The impact on other businesses can vary. For example, disruption in the oil drilling and refining activities in the Gulf of Mexico during the 2005 hurricane season caused some companies to lose revenue due to the loss of productive capacity, but also caused the price of oil to increase thus benefiting others in the industry. Landstar System, which has a contract to provide trucking services to the U.S. Government in the aftermath of natural disasters, was also a beneficiary[3].

Some studies have suggested that commodities provide an effective hedge against natural disasters because disasters such as floods, drought and hurricanes can affect commodity supply (see oil example above) and increase the price. However, the effect can differ across commodities - a drought could cause a shortage of corn and increase corn prices. The higher corn prices raises feed prices, which could cause ranchers to slaughter cattle earlier than usual and depress the price of that commodity in the short term.

Companies with negative exposure

Many companies are adversely impacted by the threat or actuality of natural disasters. Some include:

  • Property & Casualty insurance companies
  • Homebuilders and REITs with exposure to earthquake or hurricane prone regions
  • Travel and vacation companies, including cruise lines like Carnival (CCL) and Royal Caribbean Cruises (RCL) who operate in the Caribbean, where hurricanes are most common.
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