Swiss Re estimates that the insured catastrophe losses for 2020 are cUS$83bn, making 2020 the fifth costliest year on-record. Of this, cUS$76bn is due to natural catastrophes (+c40% vs. 2019), with man-made loss events responsible for the other cUS$7bn.
Out of the natural catastrophe insured losses, the majority have been driven by secondary perils such as severe convective storms and wildfires in the US – whereas the very active hurricane season only produced cUS$20bn of losses.
Swiss Re warns that “Climate change is expected to exacerbate secondary peril events as more humid air and rising temperatures create more extreme weather conditions. These favour the onset and spread of events such as wildfires, storm surges and floods … As with COVID-19, climate change will be a huge test of global resilience. Neither pandemics nor climate change are ‘black swan’ events. But while COVID-19 has an expiry date, climate change does not and failure to ‘green’ the global economic recovery now will increase costs for society in future. This year’s natural disasters impacted regions with more insurance cover in place, providing vital support to the people and communities affected and enhancing their financial resilience.”
Overall (because of the concentration of severe weather events in the United States), the insurance industry covered c45% of global economic losses in 2020, above the ten-year average of c37%.
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