Data from Swiss Re’s latest Sigma report shows that an absence of large and costly hurricanes in the US saw global economic losses from natural and man-made disasters sink to $146 billion in 2019, down from $176 billion in 2018 and below the 10-year annual average of $212 billion.
Of the $60 billion insured losses incurred in 2019, natural catastrophes accounted for $52 billion.
Swiss Re notes that the biggest industry loss events of 2019 happened in densely populated and developed parts of Japan: Typhoon Faxai in September (insured losses of $7 billion); followed by Typhoon Hagibis in October (additional insured losses of $8 billion).
Moving forward, Swiss Re expects economic and insured losses resulting from such events to rise due to climate change and present a major threat to global resilience.
Swiss Re adds that, while the effects of climate change are already evident, socio-economic trends will continue to mask its impact.
Economic development and population spread leads to changes in land use resulting in, for instance, deforestation and construction in flood plains and wildland-urban interface.
Another variable is the scale of risk mitigation infrastructure like flood barriers and sea defences.
Swiss Re notes how these factors all influence the scale of losses inflicted by extreme weather events and other natural disasters.
“Economic development and ever-increasing population concentration in urban centres, alongside changes in climate, will continue to increase losses due to weather events in the future,” said Edouard Schmid, Chairman of the Swiss Re Institute and Group Chief Underwriting Officer at Swiss Re.
“Our industry can play a key role by partnering with clients and governments to develop scalable solutions that support the transition to a low-carbon world by managing risks associated with renewable energy projects and making these more attractive to investors with re/insurance risk-transfer backing.”
Jerome Jean Haegeli, Group Chief Economist at Swiss Re, added, “It’s difficult to quantify the exact effects rising temperatures have on specific weather related catastrophes, but climate change is a threat that demands immediate action due to its dire effects on both human life and the global economy.”
