Extreme weather drives insured losses to highest since 2017

INSURED losses from natural catastrophes soared to US$140 billion last year, the highest since 2017 and well over double the 30-year average.

Hurricanes Milton and Helene, which ripped through the US, ended up being the costliest natural disasters of 2024, according to industry data compiled by Munich Re and published in a report on Thursday (Jan 9). Extreme flooding in Dubai and in Spain’s Valencia region, where more than 200 people died, also led to billions of US dollars in insurance losses.

And this year is starting off with wildfires in the Los Angeles area that threaten to be the most financially damaging in history.

The increase in natural catastrophes has coincided with a rapid rise in temperatures. Last year was the planet’s hottest year on record, with the European Union’s Copernicus Climate Change Service recording a global average of 1.62 deg C above pre-industrial levels in November, breaching the critical threshold of 1.5 deg C.

“Science has become more certain that climate change plays a crucial role in making weather disasters more frequent and more extreme,” Tobias Grimm, Munich Re’s chief climate scientist, said in an interview. And climate change appears to be upending what had once been considered weather norms. “Dubai, for example, isn’t exactly considered a hot spot for flooding,” he said.

Grimm said it’s clear that higher temperatures have led to the more frequent occurrence of intense rainfall, while there’s a greater incidence of tropical cyclones rapidly picking up in force as they develop.

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Hurricane Milton, which hit Florida in October, caused US$25 billion of insured losses. It narrowly missed the densely populated Tampa metropolitan area, avoiding a scenario that would have triggered considerably more destruction. Just weeks earlier, Hurricane Helene resulted in US$16 billion in losses.

Overall damages from natural disasters reached US$320 billion last year, the most since since 2021, according to the Munich Re report. Weather catastrophes were responsible for 93 per cent of overall losses, and for 97 per cent of insured losses. About 11,000 people lost their lives as a result of natural disasters in 2024, the reinsurer said.

Insurers have tended to respond to the surge in extreme weather events by retreating from some areas deemed too risky to cover. Grimm said every risk can be insured “if you get the right premiums.” Munich Re doesn’t “generally exclude any regions from insurance because of climate change,” he said. BLOOMBERG