Total economic losses from natural and manmade catastrophes reached $259 billion, up by 20%
Extreme weather events in 2021, including a deep winter freeze, floods, severe thunderstorms, heatwaves and a major hurricane, resulted in annual insured losses from natural catastrophes estimated at $105 billion, the fourth highest since 1970, according to Swiss Re Institute’s preliminary sigma estimates.
Man-made disasters triggered another $7 billion of insured losses, resulting in estimated global insured losses of $112 billion in 2021.
Total economic losses from natural and manmade catastrophes reached $259 billion, up by 20% on the previous year and higher than the 10-year average of $229 billion.
While Hurricane Ida was the costliest natural disaster in 2021 for the insurance industry, winter storm Uri and other secondary peril events caused more than half of total losses as wealth accumulation and climate change effects in disaster-prone areas drive claims. In Asia, there was severe flooding events in China’s Henan province during July.
”The impact of the natural disasters we have experienced this year once again highlights the need for significant investment in strengthening critical infrastructure to mitigate the impact of extreme weather conditions,” said Jérôme Jean Haegeli, Swiss Re’s group chief economist.
”Investments in infrastructure support sustainable growth and resilience and need to be upscaled. In the US alone, the infrastructure investment gap to maintain critical and aging infrastructure is $500 billion on average per year until 2040.”
“Partnering with the public sector, the insurance industry is critical for strengthening society’s resilience to climate risks, by investing in and underwriting sustainable infrastructure.”
These sigma catastrophe loss estimates are for property damage and exclude claims related to COVID-19. Loss estimates are subject to change as not all loss-generating events have been fully assessed yet with catastrophe activity remaining elevated in December, noted Swiss Re Institute.
Meanwhile, COVID-19 has elongated the claims lifecycle, particularly for large events, and it will take considerably longer than normal to assess the final tally.