In 2024, insured losses from natural catastrophes hit $140 billion, the highest since 2017, significantly above the 30-year average. Major contributors include Hurricanes Milton and Helene, along with catastrophic flooding in Dubai and Valencia, Spain. Extreme weather correlates with rising global temperatures, prompting insurers to reassess risk coverage while alarmingly high fatalities and damages from natural disasters continue to rise.
In 2024, insured losses from natural disasters surged to $140 billion, representing the highest figure since 2017 and significantly exceeding the average of the preceding 30 years. The hurricanes Milton and Helene, which struck the United States, emerged as the most expensive calamities, severely impacting the insurance landscape. Additionally, catastrophic flooding in regions such as Dubai and Valencia, Spain, contributed to these staggering losses, with the latter disaster claiming over 200 lives.
The year commenced with devastating wildfires in Los Angeles, threatening unprecedented financial repercussions. This alarming trend correlates with an escalating global temperature rise; the previous year marked the warmest on record, with averages surpassing pre-industrial levels by 1.62 degrees Celsius, thus exceeding the critical 1.5-degree threshold.
Tobias Grimm, Munich Re’s chief climate scientist, noted, “Science has become more certain that climate change plays a crucial role in making weather disasters more frequent and more extreme.” He emphasized that regions not typically associated with such extreme weather, like Dubai experiencing serious flooding, exemplify the shifting climate patterns. Enhanced temperatures have been linked to increased rainfall intensity and the rapid intensification of tropical cyclones.
The extensive damages incurred from natural disasters reached $320 billion, marking the highest total since 2021, with weather-related catastrophes accounting for 93% of these losses. Moreover, approximately 11,000 fatalities were reported as a result of these events. The insurance sector has responded to this rise in extreme weather by becoming more cautious in covering high-risk areas. However, Grimm remarked, “Every risk can be insured if you get the right premiums.”
Despite the increasing instances of extreme weather, Munich Re maintains that they do not typically exclude regions from coverage due to climate factors.
The phenomenon of rising insured losses due to extreme weather is rooted in the increasing frequency and severity of natural disasters, largely attributed to climate change. With global temperatures reaching critical highs, the costs associated with hurricanes, floods, and other catastrophes have escalated significantly over recent years. The data compiled by Munich Re illustrates the financial implications of these occurrences and presents an urgent context for understanding how climate impacts are reshaping the insurance landscape. These environmental shifts challenge traditional assumptions about risk in weather patterns across various regions, including areas historically deemed safe from certain natural disasters. As climate change continues to alter predictable weather behaviors, insurers must adapt their strategies to mitigate risk while addressing the rising economic toll of extreme weather events.
The findings presented by Munich Re underscore the alarming trend of skyrocketing insured losses which reached $140 billion in 2024, highlighting the critical intertwining of climate change with extreme weather occurrences. With the increasing intensity of natural disasters, it is evident that adaptive measures in the insurance sector are essential. While insurers navigate higher risks, maintaining an encompassing strategy towards coverage could help address the challenges posed by ongoing climatic shifts.
Original Source: www.bnnbloomberg.ca
