A new Aon report has estimated that global insured losses caused by natural disasters exceeded $130 billion in 2022, mainly driven by Hurricane Ian, which is the second-costliest event on record from an insurance perspective.
The 2023 Weather, Climate and Catastrophe Insight report, revealed that natural disasters caused a $313 billion global economic loss during the 12-month period under review – 4% above the 21st-century average – $132 billion of which was covered by insurance.
These losses were mainly driven by Hurricane Ian, which hit the U.S. in September 2022. Approximately $50-55 billion of the global insured loss total resulted from this event, the second-costliest natural catastrophe in history.
There is only one other event that surpassed Ian, according to Aon. That was Hurricane Katrina in 2005, which resulted in nearly $100 billion in insured losses on a price-inflated basis.
The data showed that 2022 was the fifth costliest year on record for insurers.
The report highlighted that approximately 31,300 people lost their lives due to global natural catastrophe events in 2022. The total number of fatalities remains below average for now 12 years in a row; however, more than 19,000 of the fatalities were heat-related deaths in Europe alone, primarily as a result of heatwaves.
It also revealed that, even though a majority of total losses in 2022 were left uninsured, the 58% “protection gap” this year was one of the lowest on record.
According to Aon this figure shows a positive shift in how businesses are navigating volatility through risk mitigation, and how insurers are providing further protection to underserved communities through access to capital.
Greg Case, CEO of Aon, said: “This report explores the events and costs of catastrophes and natural disasters in 2022 that created a staggering amount of economic loss. But this data also highlights a tremendous opportunity for us to continue to better serve clients.
“By working together on scalable solutions, we will not only mitigate risk, but bring together public, private and societal forces to accelerate innovation, protect underserved communities and strengthen the economy.”
The report also found that 421 notable natural disaster events were recorded in 2022, higher than the 21st century average of 396; 75% of global insured losses were recorded in the United States, which was higher than the average of 60%.
In Europe, windstorm Eunice was the costliest individual windstorm in the continent since 2010, with $3.4 billion in insured losses. Widespread hailstorms in France contributed to the second-highest natural disaster payouts for the country on record of $7.4 billion.
Droughts and heatwaves also severely impacted Europe, the United States, China and other regions and global insurance payouts for the drought peril were the second highest on record, at $12.6 billion globally.
Australia registered flood losses that broke the historical record as La Niña conditions persisted for a third year and Sydney recorded the highest annual rainfall.
Monsoonal floods in Pakistan had a far-reaching humanitarian impact on the country. In a summary of the 2022 monsoon season, the Pakistan Meteorological Department noted that country-wide rainfall from July to September was 175% above average.
In Latin America, both severe drought conditions and a prolonged rainy season in different regions reduced agricultural crop yield across the region.
Michal Lörinc, head of Catastrophe Insight at Aon, commented: “The devastation that disasters caused around the world demonstrate the need for wider adoption of risk mitigation strategies, including better disaster management and warning systems that improve resilience.
“While impacts of climate change become increasingly visible around the world, it is the socioeconomic aspects, demographics and wealth distribution that remain a major driver of financial loss.”
Lörinc highlighted that the data in this report will help guide organisations to not only enhance their own risk mitigation but take action to close the protection gap globally to better protect communities.