Aon plc has published its 2023 Weather, Climate and Catastrophe Insight report, which identifies global natural disaster and climate trends to help make better decisions to manage volatility and enhance global resilience.
The report states that natural disasters caused a $313 billion global economic loss during 2022, which was 4 percent above the 21st-century average. $132 billion of the losses were covered by insurance.
2022 was the fifth costliest year on record for insurers, with approximately $50-55 billion of the global insured loss total resulting from Hurricane Ian in the United States - the second-costliest natural catastrophe in history from an insurance perspective, surpassed only by Hurricane Katrina in 2005, which resulted in nearly $100 billion in insured losses on a price-inflated basis.
The report also highlights 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.
While a majority of total losses in 2022 were left uninsured, the 58 percent ‘protection gap’ was one of the lowest on record, highlighting 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.
Further findings of the report include:
- 421 notable natural disaster events were recorded in 2022, higher than the 21st century average of 396.
- 75 percent of global insured losses were recorded in the United States, which was higher than the average of 60 percent.
- Windstorm Eunice was the costliest individual European windstorm 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 €6.9 billion ($7.4 billion).
- Droughts and heatwaves 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.
- Flood losses in Australia broke the historical record as La Niña conditions persisted for a third year.
- 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 percent above average.
- Both severe drought conditions and a prolonged rainy season in different regions of Latin America reduced agricultural crop yield across the region.
Aon says that the report can help to build resilience in the following ways:
- Explore global and regional catastrophe loss drivers.
- Quantify the cost of which areas are seeing higher annual or decadal losses.
- Detect climate change influence on individual event behavior and impacts.
Enhance risk mitigation
- Better establish risk mitigation efforts in the public and private sectors — with initial focus in the most vulnerable areas of the world — for enhanced disaster response and business continuity.
- Modernize building codes and mandate enforcement.
- Improve risk communication and explanation of uncertainty.
- Academic collaborations in climate research will aid in the development of new tools and solutions to push forward new ideas to lower risk and promote future mitigation and adaptation practices.
Seize the opportunities
- Explore traditional and alternative insurance to protect people and assets.
- Grow the volume of assets dedicated to sustainable investment to accelerate green initiatives that will meet net-zero emissions goals.
- Economic, social and governance strategies to assess, disclose and manage risks, including climate.
- Build resilience through public-private collaborations to close the protection gap, protecting and enriching lives around the world.