Flood losses in Australia broke the historical record and monsoonal floods in Pakistan had a far-reaching humanitarian impact
Aon has published its 2023 Weather, Climate and Catastrophe Insight report, which reveals that natural disasters caused a $313 billion global economic loss during the 12-month period under review - 4 percent above the 21st-century average - $132 billion of which was covered by insurance.
While a majority of total losses in 2022 were left uninsured, the 58 percent “protection gap” was one of the lowest on record, highlighting a positive shift in how businesses are navigating volatility through risk mitigation.
“The devastation that disasters caused around the world demonstrate the need for wider adoption of risk mitigation strategies, including better disaster management and warning systems that improve resilience,” said Michal Lörinc, head of Catastrophe Insight at Aon.
“While impacts of climate change become increasingly visible around the world, it is the socioeconomic aspects, demographics and wealth distribution that remain a major driver of financial loss.
Fifth costliest year for insurers
Data shows that 2022 was the fifth costliest year on record for insurers, with approximately $50-55 billion of the global insured loss total resulting from Hurricane Ian in the United States.
Ian was the second-costliest natural catastrophe in history from an insurance perspective, surpassed only by Hurricane Katrina in 2005, which resulted in nearly $100 billion in insured losses on a price-inflated basis.
Further findings include:
- 421 notable natural disaster events were recorded in 2022, higher than the 21st century average of 396.
- 75 percent of global insured losses were recorded in the United States, which was higher than the average of 60 percent.
- Windstorm Eunice was the costliest individual European windstorm since 2010, with $3.4 billion in insured losses. Widespread hailstorms in France contributed to the second- highest natural disaster payouts for the country on record of €6.9 billion ($7.4 billion).
- Droughts and heatwaves severely impacted Europe, the United States, China and other regions and global insurance payouts for the drought peril were the second highest on record, at $12.6 billion globally.
- Flood losses in Australia broke the historical record as La Niña conditions persisted for a third year and Sydney recorded the highest annual rainfall.
- Monsoonal floods in Pakistan had a far-reaching humanitarian impact on the country. In a summary of the 2022 monsoon season, the Pakistan Meteorological Department noted that country-wide rainfall from July to September was 175 percent above average.
- Both severe drought conditions and a prolonged rainy season in different regions of Latin America reduced agricultural crop yield across the region.
“This report explores the events and costs of catastrophes and natural disasters in 2022 that created a staggering amount of economic loss,” said Greg Case, CEO of Aon.
“But this data also highlights a tremendous opportunity for us to continue to better serve clients. By working together on scalable solutions, we will not only mitigate risk, but bring together public, private and societal forces to accelerate innovation, protect underserved communities and strengthen the economy.”