The Swiss Re Institute has predicted that climate change will have a larger impact on economic losses in the future, with the US and Philippines anticipated to be the hardest hit.
As per the firm’s report, four key weather perils, namely floods, tropical cyclones, winter storms in Europe, and severe thunderstorms, now cause global economic losses of $200 billion every year.
With annual economic losses of 3% of GDP, the Philippines is reportedly the most impacted by the four weather perils of all 36 countries recorded in Swiss Re’s new analysis, while also being exposed to a high probability of hazard intensification.
Meanwhile, The US is second-most exposed. At USD 97 billion (0.38% of GDP), Swiss Re noted that it experiences the highest economic losses in absolute terms from weather events worldwide and at the same time, a medium probability that hazards will intensify.
“In general, countries with sizeable insurance protection gaps and where the establishment of loss mitigation and adaptation measures lags the rate of economic growth, are most financially at risk from hazard intensification. Fast-growing Asian economies like Thailand, China, India, and the Philippines are most vulnerable,” the Swiss Re Institute’s report observed.
The Institute’s analysis also noted that while flood risk is projected to intensify globally, the main driver of major weather-related economic losses in the US, as well as in east and southeast Asia, are tropical cyclones.
“Today, in absolute terms, economic losses from weather events in the US are the highest in the world, mostly driven by tropical cyclones (hurricanes). Severe thunderstorms also account for a large share of the economic losses,” the Swiss Re Institute said.
Jérôme Jean Haegeli, Swiss Re’s Group Chief Economist, commented, “Climate change is leading to more severe weather events, resulting in increasing impact on economies. Therefore, it becomes even more crucial to take adaptation measures.
“Risk reduction through adaptation fosters insurability. The insurance industry is ready to play an important role by catalysing investments in adaptation, directly as a long-term investor and indirectly through underwriting climate-supportive projects and sharing risk knowledge.
“The more accurately climate change risks are priced, the greater the chances that necessary investments will actually be made.”
