Total economic losses from natural catastrophe events reached $117 billion in the first half of 2024, of which at least $58 billion, or approximately 50% was covered by insurance, resulting in one of the lowest H1 protection gaps on record, according to insurance and reinsurance broking group Aon.
The broker’s first half 2024 global catastrophe recap reveals that at $117 billion, economic losses from natural disasters in the period came in 15% below the long-term first half mean since 2000 of $137 billion, slightly above the median of $113 billion, but significantly lower than H1 2023’s total of $226 billion.
In total, Aon recorded 30 billion-dollar economic loss events in the six month period, 22 of which occurred in the U.S.
Japan’s Noto earthquake on January 1st was the costliest H1 economic loss event, with more than $17 billion in direct damage. The most expensive insured loss event was a period of SCS activity in the U.S. in March, estimated at $4.7 billion.
In fact, with the exception of the Southern Germany floods, the top five costliest insured loss events in H1 2024 were SCS events in the U.S.
In terms of overall insured losses, Aon puts the total at at least $58 billion, which is much higher than the 21st-century average of $39 billion, but lower than the H1 total of the previous three years, which all saw global insured losses of more than $60 billion, according to Aon’s data.
“However, outlook for the next six months is marked by heightened expectations of potentially costly hurricane season, as well as continuing convective storm activity in the United States and Europe. By early July, the second named storm of the season, Hurricane Beryl, already resulted in potentially multi-billion-dollar losses,” says the broker.
Interestingly, Aon’s report finds that the protection gap, which is the difference between economic and insured losses, can be preliminary estimated at just 50%, which is actually one of the lowest H1 gaps on record. Aon attributes this to the higher contribution of U.S. severe convective storm insured losses.
Michal Lörinc, head of Catastrophe Insight at Aon, commented: “It is great to see a lowering of the global protection gap, which is a result of the high levels of insurance coverage for the SCS events observed in the first half of 2024.
“However, the re/insurance industry needs to continue its efforts to increase levels of insurance in emerging markets, through provision of not just capital and capacity, but also advanced data and analytics, which help to qualify and quantify the risk, and ultimately shape better decisions.”
“Our Risk Capital experts leverage analytics to bring capital to clients and ensure that the impact of natural catastrophes is spread across the risk transfer chain to protect communities and businesses,” added Andy Marcell, global CEO of Aon’s Risk Capital and Reinsurance Solutions.
