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The Actuary The magazine of the Institute & Faculty of Actuaries

Costliest decade of natural disasters recorded

Natural disasters have resulted in more economic losses over the last 10 years than in any other decade on record, research from insurance company Aon has found.

Wildfires becoming more costly ©Shutterstock
Wildfires becoming more costly ©Shutterstock

In a report published today, Aon revealed that $2.98trn (£2.28trn) of damage was caused by natural disasters over 2010-2019, which was 1.19trn higher than over 2000-2009.

It also found that there was $232bn of losses recorded in 2019, of which $71bn was covered by private sector and government-sponsored insurance programmes.

This means that the insurance protection gap – the proportion of economic losses not covered by insurance – was 69% in 2019, which was the fifth lowest since 2000.

“Strong capitalisation has allowed the re/insurance industry to comfortably manage recent losses,” said Andy Marcell, CEO of Aon’s Reinsurance Solutions Business.

“However, as socioeconomic patterns further combine with scientific factors such as climate change, the potential financial costs are only going to increase, so building resilience is key."

The report shows that there were a total of 409 natural catastrophe events last year, with Japanese typhoons Hagibis and Faxai most costly from an insurance perspective.

The researchers also revealed that 2019 was the second-warmest year on record for land and ocean temperatures since 1851.

Record temperatures of 46°C were seen in France, and 42.6°C in Germany, while the January to May period was the wettest ever recorded in the US, with 15.71 inches of rainfall.

Perhaps the biggest takeaway over the last decade, according to Aon meteorologist Steve Bowen, is that wildfires, floods and other events once considered ‘secondary’ perils have become more costly and impactful.

“Scientific research indicates that climate change will continue to affect all types of weather phenomena and subsequently impact increasingly urbanised areas,” he continued.

"As the public and private sectors balance an understanding of the science with smart business solutions, this will lead to new advances that lower the physical risk and improve overall awareness."

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