NATURAL disasters in Asia-Pacific and Africa caused losses of US$64 billion in 2023, and only about US$8 billion of these losses were insured, according to an annual report by reinsurance company Munich Re.

This puts the proportion of insured losses in these regions – which are made up mainly of developing economies and emerging markets – at the lowest in the world at 12 per cent, compared with a global average of 38 per cent, said Dr Achim Kassow, Munich Re’s board member responsible for the Asia-Pacific region.

Typhoon Doksuri, which hit several Asian jurisdictions including China, the Philippines and Vietnam in July last year, was the costliest for the region with overall losses of US$25 billion. Only US$2 billion of losses had been insured, stated the Munich Re report which was released on Tuesday (Jan 9).

“This illustrates the extent of the vulnerability of many regions in Asia to the financial impact of natural disasters. Climate change increases the urgent need to close the insurance gap in Asia-Pacific and Africa, given that storms like Doksuri are likely to become more frequent,” said Dr Kassow.

Across the world, natural disasters resulted in losses of around US$250 billion in 2023 – the same as the level of losses in 2022.

However, insured losses declined to US$95 billion in 2023, compared with US$125 billion the previous year.

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The number of deaths caused by natural disasters rose to 74,000 in 2023, well above the annual average of 10,000 over the last five years.

North America recorded the highest losses at US$100 billion, out of which US$67 billion was insured. Natural disasters in Europe resulted in US$83 billion of losses, with insured losses at US$19 billion.

The most destructive natural disaster in 2023 were the earthquakes in Turkey and Syria, which led to overall losses of US$50 billion, with insured losses at US$5.5 billion.

There were no mega-disasters in industrialised countries that drove up the amount of losses in 2023. Instead, it was characterised by a large number of severe regional storms.

The report noted that such high thunderstorm losses have never been recorded before in the United States or in Europe.

Assets worth around US$66 billion were destroyed in North America, of which US$50 billion was insured, while in Europe the figure was US$10 billion with US$8 billion insured.

These weather disasters were exacerbated by extremely high temperatures, with 2023 being the hottest year on record since temperature measurements began. Average temperatures in November last year were about 1.3 degrees Celsius above pre-industrial times.

The El Nino phenomenon, a natural climate oscillation in the North Pacific with effects on extreme weather in many regions of the world, played a role in rising temperatures. Researchers, however, attribute the trend towards warmer global temperatures mainly to climate change, with natural fluctuations playing a subordinate role. 

“The warming of the Earth that has been accelerating for some years is intensifying the extreme weather in many regions, leading to increasing loss potentials. More water evaporates at higher temperatures, and additional moisture in the atmosphere provides further energy for severe storms. Society and industry need to adapt to the changing risks – otherwise loss burdens will inevitably increase,” said Ernst Rauch, chief climate scientist at Munich Re.  

The report also stated that Typhoon Doksuri falls into the pattern that scientists expect as a result of climate change, namely a shift towards an increased number of intense storms and storms with extreme rainfall.