Insured losses from natural disasters surged to $140 billion in 2024, the highest since 2017. This increase is attributed to extreme weather events, including Hurricanes Milton and Helene and severe flooding in Dubai and Valencia. With climate change contributing to the intensification of these events, insurers are reevaluating coverage strategies despite the ongoing risks.
Insured losses from natural disasters reached a staggering $140 billion in 2024, marking the highest figure since 2017 and more than double the 30-year average. The report by Munich Re identifies Hurricanes Milton and Helene as the costliest disasters, with Milton causing $25 billion in losses following its October landfall in Florida, narrowly avoiding greater destruction.
Additionally, unprecedented flooding events in Dubai and Valencia, Spain, which resulted in over 200 fatalities, further compounded the financial strain on insurers. As the year progresses, wildfires in Los Angeles have already emerged as a significant threat to insurance finances.
This trend is exacerbated by the alarming rise in global temperatures; 2024 was the hottest year on record to date. Observations from the European Union’s Copernicus Climate Change Service highlighted an alarming increase of 1.62°C above pre-industrial levels by November, surpassing the critical limit of 1.5°C. Tobias Grimm, Munich Re’s chief climate scientist, underscored that scientific consensus increasingly points to climate change as a driving force behind the rising frequency and severity of weather-related disasters.
Grimm indicated a clear correlation between higher temperatures and intensified rainfall as well as the rapid intensification of tropical cyclones. The total damages from all natural disasters in 2024 reached $320 billion, with weather events accounting for 93% of total losses and 97% of insured losses. Despite the heightened risk, Grimm remarked that insurance can remain in play for any area, provided that appropriate premiums are established, stating, “Every risk can be insured if you get the right premiums.”
Insurers are adjusting by reevaluating their coverage strategies in high-risk areas but do not categorically exclude regions because of climate change.
The significant rise in insured losses from natural catastrophes reflects an alarming trend in the increasing frequency and severity of extreme weather events exacerbated by climate change. A combination of factors such as rising global temperatures, severe tropical cyclones, and unprecedented flooding has highlighted the urgent need for reassessment in disaster risk management. Insurance companies are becoming increasingly cautious in their coverage, responding to the changing landscape of risks posed by climate phenomena.
In summary, the record-breaking insured losses due to natural disasters in 2024 point to an urgent need for understanding the implications of climate change on extreme weather patterns. The alarming rise in temperatures and the proactive stance of industry leaders underscore the critical intersection between environmental factors and insurance provision. As climate conditions continue to evolve, both insurers and policyholders must adapt to safeguard their interests against the growing threats posed by natural disasters.
Original Source: www.bnnbloomberg.ca
