Companies Extreme Weather Sends Insured Losses 70% Above Historical Norms
Natural catastrophes caused about $62 billion in insured losses in the first half of 2024, 70% above the 10-year average. Extreme wildfires, droughts, and floods disrupted historical norms.
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Munich Re compiled the data, revealing that weather catastrophes in the US dominated losses. Tobias Grimm, Munich Re’s head of climate advisory, noted that floods occurred in rare regions like Dubai.
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Climate change significantly influences these trends, Grimm said. Hurricanes and wildfires have left parts of North America in shock.
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Natural catastrophes caused $120 billion in total losses in the first six months of 2024. Meteorologists predict an active hurricane season, with wildfires raging from California to Alberta.
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Long-lasting heat waves drive forest fires, Grimm explained. Meteorological, socioeconomic, and underwriting data indicate changing risk patterns. Climate change fuels storms and fires, increasing property damage risks.
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Higher claims payments result for insurers. The industry uses instruments like catastrophe bonds to offload risk. However, some regions are becoming uninsurable.
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Insurance Europe, representing insurers and reinsurers, reports no evidence of firms exiting European Union markets. Nonetheless, protection gaps and new challenges arise due to climate change, according to Oleksandra Hrendey, a senior policy adviser at Insurance Europe.
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Munich Re’s analysis shows that in the US, severe thunderstorms caused over $34 billion in insured damages in the first six months of 2024. Total damages from these events amounted to $45 billion. Germany also faced costly storms and flooding in May.
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The costliest natural disaster was an earthquake in Japan on New Year’s Day. It caused about $10 billion in total estimated losses, with $2 billion insured.
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Grimm highlighted that insured natural disaster losses have exceeded $100 billion in six of the past seven years, surpassing historical norms. The industry is adjusting to this new reality.
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