Insured Losses from Natural Disasters Reach Record Highs in 2024

Insured losses from natural disasters reached $140 billion in 2024, the highest since 2017, with Hurricane Milton causing $25 billion in damages. The rise in extreme weather is linked to climate change, as global temperatures hit record levels. Over 11,000 fatalities occurred due to natural disasters, prompting insurers to rethink their coverage strategies amid increasing risks.

Insured losses due to natural disasters escalated to $140 billion in 2024, marking the highest figure recorded since 2017 and more than double the three-decade average. Among the most significant incidents were Hurricanes Milton and Helene, which struck the United States, incurring the most substantial financial damages. Extreme flooding events also occurred in Dubai and Spain’s Valencia region, resulting in increased insurance claims and fatalities. The year commenced with wildfires in the Los Angeles area that are projected to be historically costly.

The surge in natural catastrophes has been linked to rising global temperatures, which hit record highs last year. In fact, the European Union’s Copernicus Climate Change Service indicated a global average temperature increase of 1.62 degrees Celsius above pre-industrial levels by November, surpassing the critical threshold of 1.5 degrees Celsius. Despite the unfolding climate crisis, Munich Re’s chief climate scientist, Tobias Grimm, emphasized that climate change is significantly affecting the frequency and severity of weather calamities.

Hurricanes Milton and Helene contributed notably to the insured losses, with Milton alone causing $25 billion in damages. Fortunately, Milton skirted the densely populated Tampa area, potentially averting far greater destruction. Overall, 2024 saw total damages from natural disasters reach $320 billion, the highest since 2021, with meteorological events responsible for 93% of these losses and a staggering 97% of insured ones. Tragically, these disasters claimed approximately 11,000 lives throughout the year.

In response to the amplified risks posed by extreme weather, insurers have begun to withdraw coverage from areas deemed excessively hazardous. However, Grimm reassured that all risks associated with insuring can be accommodated, provided appropriate premiums are established. Notably, Munich Re does not typically exclude regions from its insurance offerings as a direct response to climate change.

The rising frequency and intensity of natural disasters are becoming increasingly evident, with 2024 experiencing a remarkable spike in insured losses resulting from such incidents. Events like hurricanes and severe flooding have underscored the rising costs associated with climate-related calamities. This trend aligns with a broader concern regarding global warming and climate change, which are projected to influence weather patterns and catastrophe risks. The insurance industry faces growing challenges in mitigating these risks while ensuring coverage in vulnerable areas.

In summary, the year 2024 witnessed a notable escalation in insured losses stemming from natural disasters, underscoring the profound impact of climate change on weather patterns. The combined effects of extreme weather events like hurricanes and flooding highlight the urgent need for effective risk management strategies within the insurance sector. As the frequency of such calamities continues to rise, ongoing discussions regarding the adequacy of premiums and coverage in high-risk areas will be crucial for addressing challenges posed by extreme weather.

Original Source: www.bnnbloomberg.ca