Throughout the history of the modern insurance industry, insurance companies have had to pay out billions of dollars of claims for death, loss of property, destruction of buildings, natural disasters, accidents, and many more calamities. Within the last few years, many more of these events have occurred, which have led to massive payouts in claims.
The ongoing Covid19 pandemic is likely to feature amongst such events that would force humongous payouts once the full extent of the financial devastation becomes available. Until then, below are the 12-largest insurance payments from the lowest to the highest in recent history.
- $1 billion – China Earthquake
- $1.3 billion – Indian Ocean Tsunami (Earthquake)
- $20.5 billion – Hurricane Ike
- $20.65 billion – Northridge Earthquake
- $25 billion – Hurricane Andrew
- $35 billion – Tohoku Tsunami (Earthquake)
- $36 billion – Hurricane Sandy
- $40 billion – Canterbury Earthquakes
- $40 billion – 9/11 Terror Attack
- $100 billion – The Lehman Brothers
- $130 billion – Hurricane Katrina, Wilma, and Rita
- $21 trillion – 2008 Financial Crisis
$1 billion – China Earthquake
An earthquake of magnitude 8.0 hit China in 2008, killing an estimated 70,000 individuals and injuring more than 300,000. The quake devastated almost all the buildings within that area of the country. The total costs of damage exceeded $20 billion. However, just $1 billion in claims was paid, as most of the populace did not have insurance cover.
$1.3 billion – Indian Ocean Tsunami (Earthquake)
In 2004, an earthquake of magnitude 9.1 hit an area in the Indian Ocean, which generated a tsunami that left significant death and destruction. About 230,000 people lost their lives with Indonesia, accounting for a larger share of over 160,000 death. The financial damage in the wake of the tsunami caused an insurance payout of about $1.3 billion.
$20.5 billion – Hurricane Ike
Hurricane Ike was a force of nature that left death and destruction in parts of North America and the Caribbean. This hurricane caused enormous damage to buildings and agricultural fields as floods swept through Haiti, Cuba, Ohio, and Texas. About 200 people lost their lives. Insurers paid out $20.5 billion in claims across several countries. In American alone, over $12 billion was paid out in insurance claims between Texas and Ohio.
$20.65 billion – Northridge Earthquake
The Northridge Earthquake was another destructive event in American history. An earthquake of magnitude 6.7 on the Richter Scale killed and injured about 9,000 people. It damaged over 40,000 buildings causing an insurance payout of approximately $20.65 billion. After this incident, many insurance companies completely stopped offering earthquake insurance policies. Those that did include several restrictions to limit payout.
$25 billion – Hurricane Andrew
Hurricane Andrew was a category five hurricane that hit parts of America and the Caribbean. The hurricane occurred in 1992 and killed 65 people. Several insurers paid about $20 billion in payouts for damage to life and property. Many assurers lost their insurance coverage as several insurers went bankrupt.
$35 billion – Tohoku Tsunami (Earthquake)
Although Japan is an earthquake-prone location, the earthquake in 2011 was one of the worst to ever occur in the country at 9.0 on the Richter scale. The quake caused a massive tsunami with massive waves that killed about 16,000 individuals and injured 6,000. The disaster caused an estimated $210 billion worth of damage across the worst-hit areas by the tsunami. Insurers were only able to pay out $35 billion in claims.
$36 billion – Hurricane Sandy
In 2012, Hurricane Sandy hit the east coasts of Canada, America, and the Caribbean. Over 200 people lost their lives with an estimated $70 billion worth of damage to properties. Several insurers were wrapped up in fraud to reduce the amount of money to be paid out as claims. Nonetheless, insurers were forced to pay out $36 billion in claims to assurers.
$40 billion – Canterbury Earthquakes
Between 2010 to 2011, 4 big earthquakes and thousands of aftershocks hit the city of Christchurch, New Zealand, destroying property worth billions of dollars. Insurance companies paid out $40 billion in claims, which ranked this disaster as one of the most expensive payouts in the world.
$40 billion – 9/11 Terror Attack
The 9/11 terror attacks are the most devastating attack on American soil that killed over 3,000 people. The Twin Towers of the World Trade Center and the Pentagon were attacked using commercial jetliners. The attack destroyed properties that amount to billions of dollars. Insurers paid out about $40 billion in claims to victims. Many insurers decided to remove the automatic coverage of terrorism from policies.
$100 billion – The Lehman Brothers
$130 billion – Hurricane Katrina, Wilma, and Rita
In 2005, Hurricane Katrina, Wilma, and Rita caused record destruction on the eastern coast of America. Over 4,000 fatalities were recorded. Insurers paid out about $130 billion in claims. Katrina alone accounted for almost $50 billion in claims.
$21 trillion – 2008 Financial Crisis
This event was the most detrimental financial crisis in recent history after the 1929 Great Depression. It caused significant economic hardship and recession all across the world. Governments all around the world rolled out financial bailouts to cushion the effect of the crisis. Until now, the 2008 Financial Crisis is the only event that has forced the largest insurance payout of $21 trillion worldwide. Experts believe that the worldwide lockdown as a result of the Covid19 pandemic may surpass the 2008 financial crisis in terms of an insurance payout.