Last year third-most expensive for nat cat insured losses, says Munich Re

Last year was a loss-heavy one for the insurance market, with natural disasters causing insured losses of $140bn, compared to $106bn in 2023, adjusted for inflation, according to Munich Re. The reinsurer noted that insured losses were considerably higher than the inflation-adjusted averages of the past ten years of $94bn and 30 years of $61bn. In terms of insured losses, 2024 was the third-most expensive year. It said that since 1980, only two years have cost insurers more. Natural disasters caused $320bn in overall losses in 2024, compared to $268bn in 2023 adjusted for inflation. Weather catastrophes were responsible for 93% of overall losses and 97% of insured losses. Losses from non-peak perils such as floods, wildfires, and severe thunderstorms were yet again substantial, producing total losses of $136bn, of which around $67bn were insured, said Munich Re. “It is striking that, from a long-term perspective, non-peak perils are increasingly fuelling the trend of rising losses, while peak risks like tropical cyclones and earthquakes continue to be a source of loss volatility,” said Munich Re. In 2024, tropical cyclones alone contributed $135bn to the total losses and $52bn to the insured numbers, according to Munich Re. The majority of these losses were caused by major hurricanes in the US at $105bn, of which $47bn was insured. Thomas Blunck, member of the board of management, said: “One record-breaking high after another – the consequences are devastating. The destructive forces of climate change are becoming increasingly evident, as backed up by science. Societies need to prepare for more severe weather catastrophes. Accordingly, Munich Re is expanding and adapting its risk models to address these developments. This allows us to maintain, and even expand, our substantial risk capacity, helping to close the protection gap. At its core, insurance puts a price tag on the risks, which further encourages prevention.” Hurricanes Helene and Milton, which struck the US in rapid succession in September and October respectively, were the most destructive disasters of 2024. Helene resulted in the largest overall losses from natural disasters in 2024 at $56bn, $16bn of which was borne by insurers. Hurricane Milton produced the highest insured losses of the year, totalling $25bn with a total loss of $38bn. North America – including Central America and the Caribbean – once again reported the highest share of global natural catastrophe losses, and a higher proportion than usual at 60% of total losses compared to the 10-year average 54%. In total, losses North America amounted to around $190bn, of which around $108bn were insured. In Europe, natural disasters destroyed assets worth $31bn last year, of which $14bn were insured, said Munich Re, with the most serious catastrophe the extreme flooding in Spain near the provincial capital of Valencia. In the Asia-Pacific region and Africa, the total losses of around $91bn were higher than in the previous year of $66bn. They were also higher than the 10-year average of $66bn. At around $16bn, insured losses were significantly higher than in the previous year's $10bn, said Munich Re. “Hardly any other year has made the consequences of global warming so clear: with annual average temperatures reaching around 1.5°C above pre-industrial levels for the first time, 2024 will surpass the previous record from 2023. This makes the past 11 years the warmest since the beginning of systematic record-keeping,” Munich Re said. It added: “The impact of man-made climate change on weather disasters has been proven many times over by research: in many regions, severe thunderstorms and heavy rainfall are becoming more frequent and more extreme. Although tropical cyclones are not generally increasing in number, the proportion of extreme cyclones is growing. They, in turn, are rapidly intensifying and bringing extreme precipitation with them.” Munich Re’s chief climate scientist Tobias Grimm said: “The physics are clear: the higher the temperature, the more water vapour and therefore energy is released into the atmosphere. Our planet’s weather machine is shifting to a higher gear. Everyone pays the price for worsening weather extremes, but especially the people in countries with little insurance protection or publicly funded support to help with recovery. The global community must finally take action and find ways to strengthen the resilience of all countries, and especially those that are most vulnerable.”

Last year third-most expensive for nat cat insured losses, says Munich Re

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