Munich Re calls for urgency to make climate protection ‘priority’ as losses hit $280bn

Natural disasters rendered $280 billion in raw damage in 2021, including $120 billion in insured losses, a second straight year of sizeable increase, global reinsurer  Munich Re said in a report for the year, calling for urgency to adapt to increasing weather risks and make climate protection a priority.

The list bears impressive headline figures, including $54 billion in damages ($46 billion insured losses) from European flooding, $65 billion ($36 billion) from Hurricane Ida plus a host of eye-popping secondary perils in wildfires, tornados and more. Ida was the year’s costliest natural disaster.

"Worldwide, natural disasters caused substantially higher losses in 2021 than in the two previous years," authors wrote.

The headline 2021 tally represents a 68% increase in total losses over two years against the $210 billion ($82 billion insured loss) in 2020 and $166 billion ($57 billion) in 2019.

The insurance gap at 57% is down from prior readings, but less as a result of improved penetration. Instead, the better-insured US simply took a greater share of the beating in 2021.

The US ultimately account for over half the Munich Re total count at $145 billion in damages, of which $85 billion were insured.

Hurricane Ida may have delivered more than just material damages; it also helped deliver climate watchers a sobering message on frequency.

"Hard on the heels of the previous record-setting 30 named tropical storms in 2020, storm activity during the 2021 hurricane season was again significantly above the long-term average (14.3 for the period 1991 to 2020), with 21 named tropical storms," authors noted.

"The images of natural disasters in 2021 are disturbing," Torsten Jeworrek (pictured), a Munich Re management board member, said. "Climate research increasingly confirms that extreme weather has become more likely."

“Societies need to urgently adapt to increasing weather risks and make climate protection a priority,” he added. “Insurers meet their responsibilities by covering a portion of the risks and losses. By applying risk-adequate premiums, they put a price on natural hazards, thereby encouraging carefully considered behaviour to limit the losses.

“At the same time, severe volcanic eruptions and earthquakes in 2021 showed that we should not overlook these categories of natural disasters either.”

Rare events added to both the damages tally and the sense of climate urgency.  December tornados in the US likely rendered $5.2 billion in damages and $4 billion in insured losses. The February 2021 Texas deep freeze, a once-a-decade event exacerbated by poor energy infrastructure, delivered $30 billion in losses, of which some one half were insured.

"“The 2021 disaster statistics are striking because some of the extreme weather events are of the kind that are likely to become more frequent or more severe as a result of climate change," Ernst Rauch, chief climate and geo scientist at Munich Re, commented. "Among these are severe storms in the USA, including in the winter half-year, or heavy rain followed by floods in Europe."

Losses in Asia-Pacific were called "modest" with stand-out losses in a severe flood in Henan Province in central China and A 7.1-magnitude earthquake struck off the east coast of Japan in February.

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