Global insured losses from natural disasters hit $118 billion in 2023, a recently released 2024 Climate and Catastrophe Insight report by the insurance and reinsurance broker, Aon has disclosed.
The report states that this marks the fourth consecutive year that insurance losses have exceeded the 21st-century average, reflecting the increasing impact of natural disasters on the global economy.
It pointed out that global insurance losses during the year soared to 31 percent above the 21st-century average, surpassing $100 billion for the fourth consecutive year.
“Aon pegs economic losses from nat cats at $380 billion from 398 events, a 22 percent increase above the 21st-century average, leaving a protection gap of 69 percent, emphasising the urgent need to expand insurance coverage”.
The spike, it noted was primarily driven by significant earthquakes and relentless severe convective storms (SCS) in the United States and Europe.
“The number of large-loss natural hazard events reached unprecedented levels in 2023, with 66 billion-dollar economic loss events and 37 billion-dollar insured loss events. Earthquakes caused the most economic losses, while severe convective storms proved to be the most costly for insurers”, it further stated.
According to the report, natural hazards in 2023 led to the tragic loss of 95,000 lives globally, the highest number since 2010. Earthquakes and heatwaves were the primary contributors to this toll, stressing that 2023 emerged as the hottest year on record, with ‘unprecedented temperature anomalies,’ affecting 24 countries and territories.
The CEO of Aon, Greg Case stressed the need for organisations to enhance resilience in the face of increasing climate and catastrophe risks and highlighted the collaborative efforts across the private and public sectors to accelerate innovation, protect vulnerable communities, and address the economic impacts of extreme weather.
Andy Marcell, CEO of Risk Capital and CEO of Reinsurance at Aon, emphasised the importance of utilising forward-looking diagnostics to analyse climate trends and mitigate risks, particularly in sectors such as construction, agriculture, and real estate.
The report identified the insurance industry as playing a critical role in improving the financial resilience of communities and bridging the protection gap with innovative products.
The Head of Catastrophe Insight at Aon, Michal Lörinc underscored the vulnerabilities of different communities to disasters and cited examples such as earthquakes revealing underinsurance issues and the necessity for proper infrastructure maintenance and reliable warning systems in the face of deadly floods and fires.
“Severe weather and climate-related risks now pose an existential threat to the way we live and work,” the broker’s global chief executive said.
