Insured losses to rise from global warming: Sigma study
Swiss Re’s latest sigma “Natural catastrophes in times of economic accumulation and climate change” states that it is expected global warming will lead to growing intensity and frequency of severe weather events, but also to more uncertainty in their assessment.
Economic and insured losses resulting from such events will rise in the coming decades, and this presents a major threat to global resilience. Worldwide, economic losses from natural and man-made disasters in 2019 were USD146 billion, lower than USD176 billion in 2018 and the previous 10-year annual average of USD 212 billion. The global insurance industry covered USD60 billion of the losses, compared with USD93 billion in 2018 and USD75 billion on average in the previous 10 years.
While severe weather events were still the main driver of overall losses in 2019, amplified by socio-economic developments in affected areas and climate-change effects, the decrease in losses primarily stem from the absence of large and costly hurricanes in the US.
“Economic development and ever-increasing population concentration in urban centres, alongside changes in climate, will continue to increase losses due to weather events in the future,” said Edouard Schmid, chairman of the Swiss Re Institute and group chief underwriting officer at Swiss Re. “Our industry can play a key role by partnering with clients and governments to develop scalable solutions that support the transition to a low-carbon world by managing risks associated with renewable energy projects and making these more attractive to investors with re/insurance risk-transfer backing.”
Of the economic losses in 2019, USD137 billion were due to natural disasters, with man-made events causing the remaining USD9 billion. Of the USD60 billion in insured losses, natural catastrophes accounted for USD52 billion. The biggest industry loss events of 2019 happened in densely populated and developed parts of Japan: Typhoon Faxai in September (insured losses of USD7 billion); followed by Typhoon Hagibis in October (additional insured losses of USD8 billion).
