According to the world’s top reinsurance company, Germany’s Munich Re, 2011 has been the worst year in history in terms of losses due to natural catastrophe. In a statement released on September 9, it estimated the losses caused by Hurricane Irene alone to be in the region of US$ 7 billion.

Hurricane Irene, which lashed parts of the Caribbean and the US east coast at the end of August, will cost insurers some $7 billion (5.1 billion euros).  The Munich Re estimate is considerably higher than the $6 billion calculated by the US risk-assessment firms Eqecat and Air Worldwide.  Munich Re said that due to continued flooding in the northeastern US, there remains considerable uncertainty to the loss estimates.

Irene struck North Carolina as a category one hurricane on August 27, with intense rain triggering flooding across the northeastern United States. A report by the Air Worldwide catastrophe modeling firm, noted that the hurricane brought more than a foot of rain to the Atlantic coast between North Carolina and Maine and that river levels continue to be a concern.

Munich Re estimated that its own costs would be "in the low three-digit million euro range,” but said that the company nevertheless expects to finish 2011 with a net profit, provided it doesn't have more than a billion euros of losses in the second half of the year.

Reinsurance is insurance purchased by insurers from other insurance companies to limit the total loss they would experience in case of a disaster. Ordinarily, businesses have little to be concerned with when it comes to reinsurance, however, recent natural disasters and the war in Iraq have made it difficult for insurers to secure reinsurance. As a result, some companies have left the market and premiums for certain types of insurance have risen to an all-time high.