Re/insurance broker Aon has estimated that catastrophe losses insured by the private sector or by government-sponsored programs totalled $97 billion over 2020.
Overall economic losses were estimated at $268 billion, caused by 416 catastrophe events, leaving a protection gap of 64%.
Aon’s Weather, Climate & Catastrophe Insight report for 2020 also shows that economic losses were 8% above the average annual losses for this century.
“The global response to the socioeconomic volatility caused by the COVID-19 pandemic has increased focus on other systemic risks – particularly climate change – and is causing a fundamental reordering of business priorities,” said Greg Case, CEO of Aon.
“This report highlights the increasing likelihood of ‘connected extremes’ and reinforces that leading organizations of the future will be defined by their ability to manage the global implications of concurrent catastrophic events,” he continued.
“In a highly volatile world, risk remains ever present, is more connected and, as a result, is also more severe – and 2020 has underscored this reality. It has also emphasized the need for enhanced collaboration between the public and private sectors, which will be essential to close the rising protection gap and build resilience against natural catastrophes.”
Tropical cyclone was found to be the most costly peril last year, causing more than $78 billion in direct economic damage. It was closely followed by flooding at $76 billion and severe convective storm at $63 billion.
Steve Bowen, Director and Meteorologist for Aon’s Impact Forecasting team, commented: “The world continues to evolve as it is faced with new challenges around natural perils. While many private and public sector entities primarily focus on physical and human hazard risks, an increasing number of global regulative bodies are further pivoting towards how to handle emerging transitional and subsequent reputational risks.”
“This is especially true as the financial and humanitarian risks surrounding climate-enhanced events become more evident on a daily basis,” Bowen added. Focus at the corporate and federal levels will be critical around investments in risk mitigation, resilience, and sustainability as the landscape around climate change solutions continues to accelerate with renewed urgency.”
Significant regional events during 2020 included 12 named storm landfalls on the US mainland and Super Typhoon Goni in the Philippines, which became the strongest landfalling storm ever recorded at 195 mph.
Last years was also the costliest year on record for global severe convective storms led by historic U.S. derecho.
Additionally, Ciara became Europe’s costliest windstorm since Xynthia in 2010, while drought conditions reduced agricultural crop yields in Brazil and Argentina, and Yangtze River Basin floods caused $35 billion of economic damage in China’s monsoon season.