Insurance covered just nine percent of losses with floods once again the main driver of loss - Aon
Aon has published its 2021 Weather, Climate and Catastrophe Insight report, which reveals a total of $343 billion in economic losses globally in 2021, $329 billion of which resulted from weather and climate-related events.
This makes last year the third costliest year on record after adjusting for inflation. While losses were up from 2020 globally, the number of notable disaster events slightly decreased, demonstrating the heightened costliness and severity of these events.
Flooding drives losses
For Asia, after three consecutive years (2018-2020) of economic losses topping $100 billion, the toll dipped to $72 billion in 2021. Of the 2021 losses, insurance covered only nine percent of the losses compared to 38 percent of the losses covered globally.
Brad Weir, head of Analytics, Asia for Reinsurance Solutions at Aon pointed out the knock-on impact major catastrophes can have on businesses and supply chains throughout the region and beyond.
Flooding throughout Asia was the primary driver of disaster-related fatalities during the year, further accentuated by the trend of urbanisation, leading to higher population density.
Flash flooding in Henan in July led to an economic loss of $18.6 billion, and a record-breaking $1.9 billion in covered losses, the costliest weather-related event for the Chinese insurance industry
“Clearly there is both a protection and innovation gap when it comes to climate risk,” said Owen Belman, head of Asia at Aon. “As catastrophic events increase in severity, the way that we assess and ultimately prepare for these risks cannot depend solely on historical data.
“We need to look to artificial intelligence and predictive models that are constantly learning and evolving to map the volatility of a changing climate and its interaction with a complex and ever-changing urban environment.
“With scalable solutions, organisations can make better decisions that make them more resilient as they continue to face interconnected and increasingly volatile risks.”
Other key findings in Asia include:
- Approximately 10,500 people lost their lives due to global natural catastrophe events in 2021; 46 percent of the fatalities occurred in Asia.
- Super Typhoon Rai was the deadliest tropical cyclone of the year. Its landfall in late December left 409 people dead in the Philippines and one in Vietnam. Rai became the third-costliest typhoon on record in the Philippines.
- Seasonal flooding in India led to 1,282 deaths.
- The costliest tropical cyclone in Asia was India’s Cyclone Yaas, with almost $3 billion in economic losses.
- Malaysia encountered its costliest and most extensive flood event on record in December, with total economic losses topping $2 billion.
- In Japan, the most damaging catastrophes were attributed to the earthquake peril. The combined economic loss was nearly $9 billion, mainly from the Fukushima (February) and Miyagi (March) events.
- Taiwan set a new national temperature record - 40.6°C (105.1°F) - on 11 August.
“Many Asian communities are exposed to increasingly volatile weather conditions that are in part enhanced by the growing effects of climate change,” added Weir. “This includes record-setting rainfall and flooding, intense landfalling tropical cyclones, droughts and winter storms.”
”With one of the lowest levels of insurance coverage and rapidly evolving urbanised centres, addressing vulnerabilities related to climate risk is not only critical but also presents many challenges. We can no longer build or plan to meet the climate of yesterday.”
“With physical damage loss costs rising, this is leading to lingering global disruptions to supply chains and various humanitarian and other asset-related services,” he continued.”
“There is an ongoing need for public and private entities to collaborate and help bridge the gap of insurance protection. The path forward for organisations and governments must include sustainability and mitigation efforts to navigate and minimise risk as new forms of disaster-related volatility emerge.”