Insurance Giant Aon Places Extreme Weather Costs at $653 Billion Over 2017-2018
A US$653-billion global price tag made 2017-2018 the most expensive two-year period ever for extreme weather, according to a report issued last month by UK-based Aon, the world’s biggest insurance broker based on revenue.
The two-year total included $215 billion in costs produced by hundreds of cyclones, floods, and wildfires last year. That figure “is significantly higher than that estimated [earlier in January] by rival insurer Munich Re, which set the bill for extreme weather in 2018 at $160 billion,” BusinessGreen reports. “Moreover, when natural disasters such as earthquakes are added to the mix, the 2018 figure rises to $235 billion after 394 individual natural catastrophe events.”
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About 60% of the total was not covered by private or government insurance.
“While there was not a singular ‘mega’ catastrophe event, there were 42 billion-dollar events which aggregated to a slightly above-average year,” said Andy Marcell, CEO of Aon’s reinsurance solutions division. “The re/insurance industry continues to withstand the payouts backed up with $595 billion of capital, but focus on managing the cost of changing climate and weather events by helping to close the protection gap.”
The report cited five hurricanes and typhoons that each caused at least $4 billion in estimated damage. It found that the Asia-Pacific region accounted for the majority of the more than 10,000 disaster-related deaths around the world in 2018, and seven of the 10 deadliest incidents.
BusinessGreen notes that this year’s World Economic Forum in Davos, Switzerland “highlighted extreme weather as the most pressing risk facing the planet in 2019, with climate change and environmental risks making up four of the five greatest threats to the global economy.”
As for Aon, “the complex combination of socioeconomics, shifts in population, and exposure into vulnerable locations, plus a changing climate contributing to more volatile weather patterns, is forcing new conversations to sufficiently handle the need for mitigation and resilience measures,” said Steve Bowen, director and meteorologist with the company’s impact forecasting team.
“Natural disasters are always going to occur. How well we prepare can and will play a key role in future event losses.”