Insured losses from natural catastrophes and man-made disasters in 2020 totaled $83 billion, Swiss Re reports. Losses from natural disasters accounted for over 90% of the total, racking up $76 billion in insured losses globally — a 40% increase from the year prior.
At $83 billion, 2020 is now the fifth-costliest year for the insurance industry since 1970, researchers note. In context with the year’s total global economic losses, insurance claims covered 45%, exceeding the ten-year-average of 37%, according to Swiss Re.
U.S. weather activity fuels losses
After the most active Atlantic hurricane season in recorded history, this figure doesn’t come as much of a surprise. However, despite the record-breaking activity through 30 named storms, losses were moderate, by comparison. Insurance claims from the year’s Atlantic hurricanes contributed $20 billion to the global insured loss total.
Wildfires, tornadoes and a record number of severe convective storms in the U.S. drove up insured losses considerably, as well.
2020 began with a continent on fire, in one of the worst wildlife disasters in modern history. The Australia wildfire crisis scorched more than 46 million acres after months of burns. The greatest insured loss drivers for wildfires in 2020, however, stemmed from U.S. activity in August.
More than 800 wildfires burned close to 6 million acres across California, Oregon and Washington in 2020, destroying thousands of structures and triggering billions in insured claims.
Around the world
Abroad, hail events in Australia and Canada in 2020 were responsible for a significant amount of claims, and at least $2 billion in insured losses. One event alone — a January hailstorm in southeastern Australia — caused insured losses exceeding $1 billion. Worse, Canada experienced its costliest hail event on record in Calgary in June, spurring losses of $1 billion.
Winter storms hit northern Europe in February, causing flooding, power outages and transport disruption that drove combined insured losses for the event past $2 billion.
Natural catastrophes set all kinds of records this year, but losses from these events were lower than anticipated. Swiss Re analysts explain part of the reason for this is where natural disasters hit this year. The impacted regions had more insurance cover in place, the report states, “providing vital support to the people and communities affected and enhancing their financial resilience.”
Another critical factor, Swiss Re notes, is the impact of climate change, which experts warn will continue to exacerbate secondary peril events as more humid air and rising temperatures create more extreme weather conditions, fueling wildfires, storm surges and floods.
”As with COVID-19, climate change will be a huge test of global resilience,” Jerome Jean Haegeli, Swiss Re Group Chief Economist, writes. “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.” said Jerome Jean Haegeli, Swiss Re Group Chief Economist.