Zywave | Advisen Front Page News
- Thursday, January 26, 2023
Natural disasters caused $313B in economic losses in 2022: Aon
Natural disasters caused $313B in economic losses in 2022: Aon
By Erin Ayers, Advisen
Natural disasters took a $313 billion economic toll in 2022, with insured losses coming in at an estimated $132 billion and making last year the fifth costliest year on record for insurers, according to Aon’s 2023 Weather, Climate and Catastrophe Insight report.
“New extreme weather records were broken, and many regions saw prolonged drought and scorching heatwaves,” said Aon in the report. “This is a reminder that the impact of climate change on communities around the globe is tangible and that behavior of certain natural perils will continue to be affected.”
The $313 billion puts 2022 4% higher than the 21st century average, but the insured-loss total of $132 billion is 57% higher than the century average.
Three-quarters of all insured losses from 2022 occurred in the United States. September’s Hurricane Ian produced the second-costliest event on record at an estimated $50-$55 billion in insured losses and $95 billion in economic losses.
Five events in 2022 caused at least $10 billion in economic losses – Hurricane Ian, droughts across the globe with insured losses of $12.6 billion, and seasonal flooding in Pakistan and China. Aon also cited historic flood losses in Australia and Windstorm Eunice, the costliest single windstorm in Europe since 2010 at $3.4 billion in insured losses.
"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," said Michal Lörinc, head of Catastrophe Insight at Aon. "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.”
Even with one of the smallest protection gaps (the difference between insured and economic losses) to date, just 42% of losses from the 421 global disaster losses in 2022 were covered by insurance, Aon reported.
"This report explores the events and costs of catastrophes and natural disasters in 2022 that created a staggering amount of economic loss," said Aon CEO Greg Case. "But this data also highlights a tremendous opportunity for us to continue to better serve clients.”
Aon brokers regularly hear concerns from clients that the insurance industry is “leaving the playing field” by excluding climate-related perils, exiting catastrophe-prone regions, and shying away from insuring clean-energy sectors, Case noted. However, he also said the industry shows signs of progress.
“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,” Case said.
