Insured losses by climate change exceeding $100 billion a year: Report
1 min read 10 Jan 2023, 04:24 AM ISTInsured losses from natural disasters hit about $120 billion in 2022.
PremiumThe insurance industry is struggling to adapt to a new normal in which losses fueled by climate change are now regularly exceeding $100 billion a year, according to Bloomberg news.
As per official data compiled by Munich Re, insured losses from natural disasters hit about $120 billion in 2022. Including uninsured losses, the total cost of storms, droughts, earthquakes and fires last year was $270 billion.
In an interview, Ernst Rauch, chief climate scientist at Munich Re said there is no denying that climate change is driving losses from natural catastrophes.
That’s a major departure from industry norms of less than two decades ago. Before 2005, the year Hurricane Katrina ripped through New Orleans, insured losses had never exceeded an annual $50 billion, adjusting for inflation, according to Munich Re’s records as quoted by Bloomberg.
Storms and floods proved particularly destructive last year. After Hurricane Ian, floods in Australia in February and March stand out as the costliest natural disaster of 2022, with Munich Re estimating insured losses at about $4 billion.
The Munich Re report also shows that uninsured losses are meaningfully larger than those covered by insurance, which tend to focus on the developed world. Africa and Asia, meanwhile, often face the brunt of the fallout from climate change.
World Weather Attribution, a scientific group that analyzes extreme weather for evidence of climate change, found that flooding caused more than 800 deaths in Nigeria, Niger and Chad last summer, as per Bloomberg reports.
The most devastating floods of 2022 were those that hit Pakistan, leaving at least 1,700 dead and countless more exposed to malaria, cholera and other water-borne diseases. Direct losses stemming from that event are estimated at $15 billion at least, with almost nothing insured, Munich Re said.
With such devastation beyond the scope of insurers to cover, governments and international organizations are looking into new frameworks to channel money to those most affected by climate change.
At the COP27 climate summit in Egypt last year, negotiators agreed to create a fund that will help developing nations by securing commitments from rich countries, Bloomberg reported.
The establishment of such a fund “isn’t about dispensing charity," Sherry Rehman, Pakistan’s climate minister, said after the deal was struck in late November. “It is clearly a down payment on the longer investment in our joint futures."
(With Bloomberg inputs)
