China was among the countries recording the costliest insurance industry events on record
Aon has published its 2021 Weather, Climate and Catastrophe Insight report, which evaluates the increasing frequency and severity of disruptive natural disasters and how their resulting economic losses are protected globally.
The report reveals a total of $343 billion in economic losses in 2021, $329 billion of which resulted from weather and climate-related events, making last year the third costliest year on record after adjusting for inflation.
While losses were up from 2020, the number of notable disaster events slightly decreased, demonstrating the heightened costliness and severity of these events. Just 38 percent of the 2021 losses were covered by insurance.
“Many global communities are exposed to increasingly volatile weather conditions that are in part enhanced by the growing effects of climate change. This includes record-setting episodes of extreme temperatures, rainfall and flooding, droughts and wildfires, rapidly intensifying tropical cyclones and late season severe convective storms,” said Steve Bowen, meteorologist and head of Catastrophe Insight at Aon.
“We can no longer build or plan to meet the climate of yesterday. With physical damage loss costs rising, this is also leading to lingering global disruptions to supply chains and various humanitarian and other asset-related services.”
”The path forward for organisations and governments must include sustainability and mitigation efforts to navigate and minimize risk as new forms of disaster-related volatility emerge.”
Other key findings from the report include:
- 401 notable disaster events were recorded in 2021, down from 416 in 2020
- There were 50 instances of billion-dollar economic loss events, the fourth highest year on record, with only 20 of the events reaching the billion-dollar insured threshold
- European floods in July were the costliest disaster on record for the continent at $46 billion
- Wildfires increased in prominence as conditions have become more conducive for rapid fire spread, with the term “fire season” becoming officially outdated as the risk of dangerous wildfires is prevalent during the full calendar year
- Germany, Belgium, Austria, Luxembourg and China recorded the costliest insurance industry events on record
- 2021 was the world’s sixth-warmest year on record with land and ocean temperatures at 0.84°C (1.51°F) above the 20th-century average
- The hottest temperature ever reliably measured on Earth was unofficially recorded in Death Valley, California, United States on July 9, 2021 at 54.4°C (130.0°F)
“Clearly there is both a protection and innovation gap when it comes to climate risk,” said Eric Andersen, president of Aon. “As catastrophic events increase in severity, the way that we assess and ultimately prepare for these risks cannot depend on solely historical data.”
“We need to look to technology like artificial intelligence and predictive models that are constantly learning and evolving to map the volatility of a changing climate.”
”With scalable solutions, we can help organisations make better decisions that make them more resilient as they continue to more frequently face interconnected and increasingly volatile risks.”