2020 global insured catastrophe losses reach $83bn: Swiss Re

The total insurance industry losses from natural catastrophes and man-made disasters globally amounted to $83 billion in 2020, according to Swiss Re Institute, making it the fifth-costliest year for the industry since 1970.

According to the latest estimates, nat cats caused $76 billion (around 70 percent) of global insured losses, up 40 percent from 2019, mostly from secondary peril events such as severe convective storms and wildfires in the US.

The insurance industry covered 45 percent of global economic losses in 2020, above the ten-year-average of 37 percent.

The report warned that these losses from secondary peril events are forecast to increase, driven by climate change that exacerbates wildfires, storm surges and floods.

"As with COVID-19, climate change will be a huge test of global resilience. 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.

"This year's natural disasters impacted regions with more insurance cover in place, providing vital support to the people and communities affected and enhancing their financial resilience."

The North Atlantic hurricane season brought a record 30 named storms in 2020, including five named storms making landfall in the US state of Louisiana alone.

However, most US landfalls did not hit densely populated areas in 2020, resulting in relatively low insured losses of $20 billion, far lower than in the previous record hurricane seasons of 2017 (Harvey, Irma and Maria: $97 billion) and 2005 (Katrina: $87 billion).

"Large-scale climate conditions in the North Atlantic suggest elevated hurricane activity for 2021 and likely beyond. This increases the probability of a catastrophic landfall. Combined with the loss impact of secondary perils accelerated by climate change, insured catastrophe losses will only rise in the future," said Martin Bertogg, head of cat perils at Swiss Re.