Nat cat losses to top $100bn in 2021 says Swiss Re

This year is estimated to see global insured losses of $105bn as a result of extreme weather events, according to Swiss Re Institute's preliminary sigma estimates. The reinsurer said this highlights the need for significant investment in strengthening critical infrastructure to mitigate the impact of extreme weather conditions. Natural catastrophes in 2021 included a deep winter freeze, floods, severe thunderstorms, heatwaves and a major hurricane, leading to the fourth-highest annual insured loss from natural catastrophes since 1970. The reinsurer said that while Hurricane Ida was the costliest natural disaster in 2021, winter storm Uri and other secondary peril events caused more than half of total losses, “as wealth accumulation and climate change effects in disaster-prone areas drive claims”. It added that man-made disasters triggered another $7bn of insured losses, resulting in estimated global insured losses of $112bn in 2021. “In 2021, insured losses from natural disasters again exceeded the previous ten-year average, continuing the trend of an annual 5%-6% rise in losses seen in recent decades. It seems to have become the norm that at least one secondary peril event such as a severe flood, winter storm or wildfire, each year results in losses of more than $10bn. At the same time, Hurricane Ida is a stark reminder of the threat and loss potential of peak perils. Just one such event hitting densely populated areas can strongly impact the annual losses,” said Martin Bertogg, head of cat perils at Swiss Re. The US accounted for the two costliest natural disasters: Hurricane Ida caused $30bn-$32bn in estimated insured damages, including flooding in New York; while winter storm Uri caused $15bn in insured losses. In Europe, the July flooding in Germany, Belgium and nearby countries caused up to $13bn in insured losses, with economic losses above $40bn. Swiss Re noted that this indicates a still very large flood protection gap in Europe, adding that the flooding was the costliest natural disaster for the region since 1970 and also the world’s second highest, after the 2011 Thailand flood. Europe also saw severe convective storms in June, with thunderstorms, hail and tornadoes causing widespread damage to property in Germany, Belgium, the Netherlands, Czech Republic and Switzerland, resulting in insured losses estimated at $4.5bn. Severe flooding was also seen in China's Henan province and British Columbia in Canada. And highlighting the impact of climate change, Swiss Re pointed out that Canada, adjacent parts of the US and many parts of the Mediterranean experienced record temperatures in 2021, with Canada recording a new all-time Canadian temperature record of nearly 50°C. “The impact of the natural disasters we have experienced this year once again highlights the need for significant investment in strengthening critical infrastructure to mitigate the impact of extreme weather conditions,” said Jérôme Jean Haegeli, Swiss Re's group chief economist. “Investments in infrastructure support sustainable growth and resilience, and need to be upscaled. In the US alone, the infrastructure investment gap to maintain critical and ageing infrastructure is $500bn on average per year until 2040. Partnering with the public sector, the insurance industry is critical for strengthening society's resilience to climate risks, by investing in and underwriting sustainable infrastructure.” Swiss Re noted that its estimates are for property damage and exclude claims related to Covid-19, and are preliminary and subject to change as not all loss-generating events have been fully assessed yet.