Economic losses from natural disaster cost $232 billion in 2019
A report from global consultancy Aon has revealed that 409 “natural catastrophe events” in 2019 resulted in economic losses of $232 billion, of which insurance programs covered $71 billion. The “Weather, Climate & Catastrophe Insight: 2019 Annual Report” analyzes the impact of natural disasters around the world to “identify trends, manage volatility, and enhance resilience.”
The two costliest insurance events were Typhoon Hagibis and Typhoon Faxai. Both occurred in Japan and respectively caused $9 billion and $6 billion worth of damage. Inland flooding, meanwhile, was the costliest disaster overall, causing global economic losses of $82 billion. Tropical cyclones followed close behind, at $68 billion.
"Perhaps the biggest takeaway from the last decade of natural disasters was the emergence of previously considered 'secondary' perils – such as wildfire, flood, and drought – becoming much more costly and impactful,” Steve Bowen, director and meteorologist with Aon's Impact Forecasting team, said. “Scientific research indicates that climate change will continue to affect all types of weather phenomena and subsequently impact increasingly urbanized areas. As the public and private sectors balance an understanding of the science with smart business solutions, this will lead to new advances that lower the physical risk and improve overall awareness."
According to the report, 2019 was the second-warmest year for land and ocean temperatures since 1851. France and Germany each saw record high temperatures – at 114.8 and 108.7 degrees – while the United States saw the most rainfall ever in the period from January to May, at 15.71 inches.
Overall, 2019 capped the most expensive decade ever in terms of natural disaster-caused economic damage, with costs reaching $2.98 trillion – $1.19 trillion higher than the preceding decade. The Asia-Pacific region accounted for 44% of the costs. Global insurance companies, both public and private, paid out $845 billion – with the US accounting for 55% of payouts.
“Following two costly back-to-back years for natural disasters in 2017 and 2018, there were several moderately large catastrophes, but strong capitalization has allowed the re/insurance industry to comfortably manage recent losses,” Andy Marcell, CEO of Aon's Reinsurance Solutions business, said. “However, as socioeconomic patterns further combine with scientific factors such as climate change or extreme weather variability, the potential financial costs at play are only going to increase, so building resilience is key."
