Impacts of Severe Natural Catastrophes on Financial Markets

Impacts of Severe Natural Catastrophes on Financial Markets

 

n this report we explore the potential for very large natural catastrophes to trigger market shocks and subsequent economic downturns that would have an impact on both sides of an insurance company’s balance sheet: the losses that would be paid out in claims from their property casualty underwriting portfolio and the devaluations and reduction in returns that would occur to the financial assets in their investment portfolio.

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Resource Details

Authors:
Cambridge Center for Risk Studies
Munich Re

Published:
March 2018

Length:
60 pages

Tags:
Economic Impact
Financial Sector
Insurance Subsector
Natural Disasters
Scenarios

Table of Contents

Executive Summary
Introduction
Objectives of the Study
Trillion Dollar Natural Catastrophe Scenarios
Impacts on the Economy and Financial Markets
Further Discussion
Conclusions
References

 

Scenarios

Magnitude 7.7 earthquake on the Newport-Inglewood fault system impacting Los Angeles and the surrounding area

Magnitude 8.3 earthquake in the Kantō subduction zone affecting Tokyo and parts of central Japan, compounded by an accompanying tsunami

Major hurricane impacting Miami and the Florida coast

Transitioning hurricane that retains wind strength as its track takes it over the property concentrations of the East Coast of United States including New York and the New Jersey area

Large scale VEI 6 eruption of Mount Marapi in West Sumatra, Indonesia

Large scale VEI 6 eruption of Mount Rainier in Washington

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