In 2022, insurance losses from natural disasters would total roughly $120 billion, according to official figures published by Munich Re. Last year, storms, droughts, earthquakes, and fires cost a total of $270 billion, including uninsured damages.
According to Bloomberg news, the insurance sector is trying to adjust to a new normal where losses brought on by climate change are now routinely reaching $100 billion a year.
There is no denying that climate change is a factor in natural disaster losses, according to chief climate scientist at Munich Re Ernst Rauch in an interview.
That represents a significant divergence from the industry standards of less than two decades ago. According to Munich Re’s figures, which were cited by Bloomberg, insured losses had never surpassed $50 billion the year before 2005, the year Hurricane Katrina devastated New Orleans.
Last year, flooding and storms were very damaging.
The most expensive natural disaster of 2022 will likely be the Australian floods in February and March, which surpass Hurricane Ian in cost. According to Munich Re, insured losses would likely total over $4 billion.
The Munich Re research also demonstrates that, in comparison to insured losses, uninsured losses are noticeably bigger than insured losses, which often concentrate on the developed world. Meanwhile, the consequences of climate change are frequently felt most keenly in Asia and Africa.
According to Bloomberg, the World Weather Attribution, a scientific organization that examines extreme weather for signs of climate change, determined that flooding was to blame for more than 800 fatalities in Nigeria, Niger, and Chad last summer.
The worst floods of 2022 occurred in Pakistan when at least 1,700 people died and countless others were exposed to cholera, malaria, and other water-borne illnesses. According to Munich Re, the event’s direct damages are expected to be at least $15 billion, and nearly nothing is insured.
Governments and international organizations are looking into new mechanisms to route money to those most impacted by climate change because such damage is beyond the capacity of insurers to pay.
Negotiators decided to establish a fund that will aid developing countries by gaining commitments from wealthy countries at the COP27 climate summit in Egypt last year, according to Bloomberg.
The purpose of creating such a fund “isn’t to distribute charity, “After the agreement was reached in late November, Pakistan’s climate minister, Sherry Rehman, made a statement. It is obvious that this is a down payment towards a longer investment in our combined destinies.”
