$65bn of economic losses from nat cats in Asia Pacific last year

Natural catastrophes caused $65bn of economic losses in Asia Pacific in 2023, with 91% of losses uninsured, according to Aon.

The broker’s 2024 Climate and Catastrophe Report revealed that 398 natural disaster events occurred globally in 2023, resulting in a $380bn (2022: $355bn) economic loss, 22% above the 21st-century average, driven by significant earthquakes and severe convective storms (SCS) in the US and Europe.

Economic losses in the Asia Pacific region specifically, driven primarily by floods in China and drought in India, reached $65bn – 48% lower than the 21st-century average. Just 9% of economic losses ($6bn) were covered by insurance, below the 21st-century average of $15bn. Aon said this highlighted the urgency to expand insurance protection in the region.

George Attard, CEO of Reinsurance Solutions for Aon’s Asia Pacific region, said: “The findings from Aon’s 2023 Global Risk Management Survey for Asia Pacific demonstrate that although climate change is not featured in the top ten, it directly impacts four of the top ten risks for businesses, that is business interruption, rapidly changing market trends, supply/chain distribution failure and regulatory or legislative changes. With climate driving new extreme weather records, businesses increasingly need to quantify and address the direct and indirect impact of climate risk. Businesses must therefore leverage advanced analytics and experts to help analyse climate trends and make better decisions to address risks and increase the resiliency of their operations, workforces and the communities they impact.”

The 2024 Climate and Catastrophe Insight report reveals that flooding remained a recurring threat in Asia Pacific, with annual losses having exceeded $30bn every year since 2010. Flood losses overall proved to be the costliest peril for the fourth consecutive year, accounting for more than 64% of the loss total in 2023. About half of the Asia Pacific losses were related to flooding in China, which resulted in more than $32bn economic losses and $1.4bn of insured losses.

The report noted that with economic losses of nearly $13bn and insured losses of $1.4bn, tropical cyclone losses for Asia and Oceania were 53%, and 70% below their 21st-century averages. The Asia Pacific region was hit by several large earthquakes in 2023, including Afghanistan’s Herat Province in October and China’s Gansu Province in December. Aon said extreme heat was another unexpected peril in the Asian region in 2023 with prolonged periods of extreme temperatures in 2023 in China and South and Southeastern Asia.

Brad Weir, head of analytics of Reinsurance Solutions in Asia for Aon, said: “The 2024 Climate and Catastrophe Insight report highlights the vulnerability of the region to disasters and how the lack of insurance exacerbates business risks. With climate variability we see natural hazards impacting areas that in recent times may have been largely unaffected, meaning those communities are generally under-prepared and may not have adequate insurance in place. Closing the protection gap will therefore continue to pose a challenge but also a huge opportunity for Asia Pacific. There is a growing need for advanced climate modelling and risk assessment analytics for better disaster preparedness and planning to reduce risk, protect lives and promote resilience.”