Globally, there were 416 natural disasters in 2020 that resulted in economic losses of $ 268 billion – 8% more than this century's average annual losses, according to insurance broker Aon's latest disaster report. Of this total, private-sector and government-sponsored insurance programs covered $ 97 billion, leaving a 64% protection gap, the portion of economic losses not covered by insurance.
The report notes that disaster-related costs continue to rise due to a changing climate, more people moving to risk areas and an increase in global prosperity.
Aons report, Insight into weather, climate and catastrophe: annual report 2020, evaluates the impact of global natural disasters to identify trends, manage volatility and increase resilience.
During the year, more than 8,000 people were killed as a result of natural disasters. The tropical cyclone was the most expensive threat, causing more than $ 78 billion in direct economic damage. It was closely followed by flooding ($ 76 billion) and severe convection ($ 63 billion).
From a climate perspective, the National Oceanic and Atmospheric Administration (NOAA) named 2020 the second warmest in the world since 1880 for land and ocean temperatures of + 0.98 ° C (+ 1.76 ° F) above the 20th-century average.
Greg Case, CEO of Aon, said future organizations will face more than one catastrophe at a time.
“The global response to the socio-economic volatility caused by the COVID-19 pandemic has increased the focus on other systemic risks – particularly climate change – and is causing a fundamental realignment of business priorities. This report highlights the increasing likelihood of "connected extremes" and highlights that leading organizations of the future will be determined by their ability to manage the global implications of simultaneous catastrophic events, "said Case.
He said that "in a highly volatile world, the risk is always present, more connected and as a result more serious – and 2020 has underscored this reality."
He added that the experiences of 2020 have also highlighted the need for greater cooperation between the public and private sectors – calling this essential to close the growing protection gap and build resilience against natural disasters.
According to the report, catastrophic events will increase in frequency and intensity "and in ways impossible to predict with conventional risk assessment methods."
The authors argue that catastrophe modeling has mainly been performed in the private sector, while academics and government scientists have been at the forefront of climate change science. "Now is the time to fix the blind spots," the report concludes.
The report also advises the insurance industry to develop a more tailored view of risk, enabling them to "reduce their reliance on model vendors to measure their catastrophic risk and gain confidence in their risk tolerance thresholds."
Steve Bowen, director and meteorologist for Aon's Impact Forecasting team, agreed that the world will face new challenges around natural hazards.
"While many private and public sector entities focus primarily on physical and human hazards, an increasing number of global regulators are further focusing on dealing with emerging transitional and subsequent reputational risks," Bowen said. “This is especially true as the financial and humanitarian risks of climate-related events become more apparent on a daily basis. Focus at the corporate and federal levels will be critical to investments in risk mitigation, resilience and sustainability as the landscape around climate change solutions continues to accelerate with renewed urgency. "
Major regional events in 2020 included:
- Most expensive year on record for global severe convection storms led by historic US derecho
- The mainland US has endured a record 12 storm landings, including six hurricanes
- Super Typhoon Goni hit the Philippines as the strongest landing storm ever recorded worldwide at 195 mph
- Ciara became Europe's most expensive storm since Xynthia in 2010
- Drought reduced crop yields in Brazil and Argentina, burning 30% of the Pantanal region
- The most widespread flooding in the Yangtze basin since 1998 caused $ 35 billion in economic damage in China's monsoon season
|Figure 1: Top 10 Global Economic Loss Events 1.2|
|June – September||Seasonal flooding||China||280||35.0||2.0|
|August 21 – 29||Hurricane Laura||USA, Caribbean||68||18.2||10.0|
|May 15 – 21||Cyclone Amphan||South Asia||133||15.0||0.5|
|August 8 – 12||SCS (including Midwest Derecho)||United States||4||12.6||8.3|
|July 3 – 15||Kyushu Floods||Japan||82||8.5||2.0|
|November 2 – 13||Hurricane Eta||Caribbean, USA||309||8.3||0.7|
|June – September||Seasonal flooding||India||1,922||7.5||0.8|
|September 14-18||Hurricane Sally||United States||0||7.0||3.5|
|March 22nd||Earthquake in Zagreb||Croatia||2||6.1||0.1|
|July 30 – August 5||Hurricane Isaias||USA, Caribbean, Canada||18||5.0||2.7|
|All other events||145 billion||66 billion|
|TOTAL||268 billion||97 billion|
|1||Subject to change as estimated losses evolve|
|2||Includes losses incurred by private insurers and government-sponsored programs|
The full report is available on Aon's interactive microsite at https://aon.io/3nsM7cu. To access current and historical data on natural disasters, as well as event analysis, go to catastropheinsight.aon.com.
Top Photo: In this August 27, 2020 file photo, buildings and homes are underwater in the aftermath of Hurricane Laura near Lake Charles, La. (AP Photo / David J. Phillip, File)
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