Insured losses from natural disasters in 2024 reached $140 billion, the highest since 2017. Key events, including hurricanes Milton and Helene and severe flooding in Dubai and Spain, contribute to these figures. Climate change is driving increased frequency and severity of weather events, prompting insurers to reassess their risk strategies in the face of potentially unprecedented costs.
Insured losses from natural disasters reached an unprecedented $140 billion in 2024, marking the highest figure since 2017 and significantly surpassing the 30-year average. According to a recent report by Munich Re, the hurricanes Milton and Helene, which struck the United States, emerged as the most financially burdensome disasters of the year. Additionally, extreme flooding events in Dubai and Spain’s Valencia region, which resulted in over 200 fatalities, contributed to substantial insurance payouts.
As 2025 begins, wildfires in the Los Angeles area threaten to inflict unprecedented financial damage. The escalating frequency of these natural catastrophes parallels a steep rise in global temperatures; last year was recorded as the hottest on record, with the Copernicus Climate Change Service noting a global average temperature increase of 1.62°C above pre-industrial levels, surpassing the critical threshold of 1.5°C.
“Science has become more certain that climate change plays a crucial role in making weather disasters more frequent and more extreme,” stated Tobias Grimm, chief climate scientist at Munich Re. He emphasized that climate change has disrupted previously accepted weather patterns, highlighting unusual flooding events in typically arid regions like Dubai. Grimm pointed out that rising temperatures have resulted in more intense rainfall and a notable increase in rapidly intensifying tropical cyclones.
Hurricane Milton, which impacted Florida in October 2024, was responsible for $25 billion in insured losses. It narrowly avoided a direct hit on the densely populated Tampa metro area, preventing potentially catastrophic damage. Just weeks before, Hurricane Helene resulted in $16 billion in losses.
Overall, natural disaster damages reached $320 billion in 2024, the highest since 2021, with weather-related incidents accounting for a staggering 93% of total losses and 97% of insured losses. Tragically, approximately 11,000 lives were lost due to natural disasters last year.
In response to the upsurge in extreme weather, insurers are increasingly withdrawing from regions deemed excessively high-risk. However, Grimm remarked that with appropriate premiums, every risk can be insured. Despite the challenges posed by climate change, Munich Re generally does not exclude any regions from coverage based solely on these climate factors.
The article discusses the significant increase in insured losses due to natural disasters, pointing particularly to 2024 as a year marked by extreme weather events, including hurricanes and flooding. It contextualizes these losses within a broader trend of rising global temperatures and climate change, which are intensifying the frequency and severity of such weather events. Munich Re’s report provides critical data and insights into the interconnectedness of climate phenomena and financial impacts on the insurance industry.
In summary, the report from Munich Re underscores the growing threat of climate change as a principal driver of increasing natural disaster-related financial losses, with 2024 marking a notable peak in insured damages. As extreme weather becomes more common, the insurance industry faces the dual challenge of managing risk while also adapting to changing environmental realities. The findings highlight the urgent need for a reassessment of insurance strategies as climate patterns continue to evolve.
Original Source: www.bnnbloomberg.ca
