In 2024, insured losses from natural disasters peaked at $140 billion, the highest since 2017, driven by hurricanes Milton and Helene, severe flooding, and wildfires. The increasing intensity of these events correlates with climate change and record-high global temperatures. Insurers face challenges adapting to these conditions, but some experts argue that risks can still be covered with appropriate premiums.
Insured losses from natural disasters reached an alarming $140 billion in 2024, marking the highest level since 2017 and significantly surpassing the 30-year average. Hurricanes Milton and Helene emerged as the most expensive disasters in the United States, while severe floods in Dubai and Spain’s Valencia region further contributed to monumental insurance claims. Additionally, California’s ongoing wildfires are poised to become historically costly.
This surge in insured losses aligns with a disturbing trend of extreme weather events linked to climate change, which has been attributed to rising global temperatures. The previous year was recorded as the hottest on record, with global averages exceeding crucial thresholds. According to experts, these climatic shifts are increasingly leading to both more severe rainfall and intensified tropical storms.
Among the incidents, Hurricane Milton incurred $25 billion in insured losses, narrowly averting catastrophic damage to populous regions. Overall, natural disaster-related damages totaled $320 billion in 2024, with weather events responsible for the majority of insured and overall losses. Furthermore, the report noted a tragic toll of around 11,000 fatalities due to these disasters.
In response to the increased frequency of perilous weather conditions, insurers are recalibrating their coverage policies. While some regions are deemed too hazardous for insurability, experts emphasize that risk can indeed be insured, contingent on appropriate premiums being set. Munich Re, a key player in the insurance sector, maintains a policy of not categorically excluding regions from coverage due to climate considerations.
The alarming rise in insured losses from natural catastrophes reflects a broader trend correlated with the intensification of extreme weather events due to climate change. Reports indicate that the impacts of these climatic changes are being felt globally, as evidenced by the ongoing instances of hurricanes, floods, and wildfires. The role of rising temperatures is crucial, as scientific consensus increasingly links such phenomena to climate change, underscoring the need for comprehensive disaster preparedness and mitigation strategies.
The escalation of insured losses from natural disasters to $140 billion in 2024 highlights a significant and troubling trend in the realm of climate-related risks. With increasing incidences of extreme weather events, it becomes imperative for the insurance sector to adapt its policies and pricing models. As climate change continues to influence weather patterns, robust and proactive measures must be implemented to address the rising toll of such disasters on human life and economic stability.
Original Source: www.bnnbloomberg.ca
