Last year saw the second highest global insured losses from natural disasters ever at $120bn, with an “exceptionally high” proportion coming in the US, according to new figures from Munich Re.
Europe, meanwhile, suffered heavy financial losses, but the insured total was relatively low because of a lack of insurance cover for infrastructure and flooding in affected areas, said the reinsurer.
It also warned that many of last year’s weather catastrophes fit in with the expected consequences of climate change, making greater loss preparedness and climate protection a matter of urgency.
Alongside 2005 and 2011, 2021 proved to be the second costliest on record for the insurance industry, Munich Re’s figures show. The $120bn loss only falls short of the record $146bn in 2017, when adjusted for inflation.
The loss figure is higher than the $82bn recorded by Munich Re in 2020 and $57bn in 2019.
Its insured loss estimate compares with global insured losses of $105bn from extreme weather events put forward by Swiss Re last month.
Munich Re’s figures put last year’s overall economic losses from nat cats at $280bn. This is also up on the last two years, with economic losses of $210bn in 2020 and roughly $166bn in 2019.
The uninsured portion of losses declined slightly on those two years due to a higher proportion of losses in the US, but was still approximately 57%, according to the reinsurer.
Its numbers place Hurricane Ida as the costliest natural disaster last year, with overall losses of $65bn and insured losses of $36bn.
The US accounted for a very high share of natural disaster losses in 2021 at around $145bn, with some $85bn insured.
Both overall and insured US losses were “significantly” higher than the previous two years, said Munich Re. US insured losses reached $67bn in 2020 from economic losses of $100bn, and just $26bn in 2019 from overall losses of $52bn.
Last year’s heavy US losses came from the busy Atlantic hurricane season, tornadoes in December that will cause an estimated insured loss of $4bn, and a deep freeze in February costing insurers around $15bn, said Munich Re.
In Europe, flash floods following extreme rainfall in July caused losses of $54bn, or €46bn, last year. Of this $40bn, or €33bn, was in Germany.
But Munich Re said the insured portion was relatively low at $13bn because of uninsured infrastructure losses and limited insurance cover for flooding in the affected region. Some $9.7bn of this figure was in Germany.
Munich Re’s numbers show that the Asia-Pacific region, meanwhile, suffered “modest” natural disasters last year at $50bn, of which $9bn was insured.
Almost 10,000 people lost their lives in natural disasters in 2021, which is comparable to recent years, according to Munich Re’s figures.
The reinsurer said last year’s heavy losses and type of events are in line with climate change expectations and stress the need for a new risk management approach.
“The images of natural disasters in 2021 are disturbing. Climate research increasingly confirms that extreme weather has become more likely. Societies need to urgently adapt to increasing weather risks and make climate protection a priority,” said Torsten Jeworrek, member of the Munich Re’s board of management.
Ernst Rauch, chief climate and geo scientist at Munich Re, and head of its Climate Solutions Unit, added: “The 2021 disaster statistics are striking because some of the extreme weather events are of the kind that are likely to become more frequent or more severe as a result of climate change. Among these are severe storms in the USA, including in the winter half-year, or heavy rain followed by floods in Europe. For hurricanes, scientists anticipate that the proportion of severe storms and of storms with extreme rainfall will increase because of climate change. Even though events cannot automatically be attributed to climate change, analysis of the changes over decades provides plausible indications of a connection with the warming of the atmosphere and the oceans. Adapting to increasing risks due to climate change will be a challenge.”