Climate costs2019: Economic Losses from Natural Disasters Top $232 billion in 2019
A new report from Aon shows that 409 natural catastrophe events of 2019 resulted in economic losses of $232 billion. Of that total, private sector and government-sponsored insurance programs covered $71 billion. The costliest individual peril was inland flooding, which caused economic losses globally of $82 billion, followed by tropical cyclone, at $68 billion.
Aon plc the other day released its Weather, Climate & Catastrophe Insight: 2019 Annual Report. The report evaluates the impact of global natural disaster events and aims to identify trends, manage volatility, and enhance resilience.
The report notes that the 409 natural catastrophe events of 2019 resulted in economic losses of $232 billion – 3 percent below average annual losses for this century, but 20 percent lower than the previous decade. Of that total, private sector and government-sponsored insurance programs covered $71 billion of the total – 6 percent above the century average but significantly lower than the record $157 billion in 2017 and $100 billion in 2018. This means the protection gap, which is the portion of economic losses not covered by insurance, was 69 percent in 2019 – the fifth-lowest since 2000.
Aon says that the 12-months under review witnessed $41 billion economic loss events, and $12 billion insured loss events, with the two costliest insurance events, Typhoon Hagibis and Typhoon Faxai, occurring in Japan and causing $9 billion and $6 billion in insured losses respectively, due to each storm tracking through a highly urbanized area. The costliest individual peril was inland flooding, which caused economic losses globally of $82 billion, followed by tropical cyclone, at $68 billion.
From a climate perspective, 2019 was the second warmest year on record for land and ocean temperatures since 1851. Notably, record temperatures of 46.0°C were seen in France and 42.6°C in Germany, while the January to May period was the wettest on record in the United States, with 15.71 inches (399 millimeters) of rainfall.
Andy Marcell, CEO of Aon’s Reinsurance Solutions business, commented: “Following two costly back-to-back years for natural disasters in 2017 and 2018, there were several moderately large catastrophes, but strong capitalization has allowed the re-insurance industry to comfortably manage recent losses. However, as socioeconomic patterns further combine with scientific factors such as climate change or extreme weather variability, the potential financial costs at play are only going to increase so building resilience is key.”
2010-2019 marked the costliest decade on record, with economic damage reaching $2.98 trillion – some $1.19 trillion higher than 2000-2009, and with Asia-Pacific accounting for 44 percent. Private and public insurance entities paid out $845 billion during the decade with the U.S. accounting for 55 percent alone.
