Broker Check

The Cost of Natural Disasters

January 28, 2020

According to insurance broker Aon pic's 2019 annual weather, climate and catastrophe report, the economic cost of natural disasters globally was $2.98 trillion between 2010 and 2019. This was $1.19 trillion higher than 2000-2009. The report is summarized at www.digitalournal.com/business/natural-disasters-in-past-decade-cost-the-world-3-trillion/article/565760.

Only $845 billion of losses were insured, just over 28%. In the United states the percentage of insured losses were higher.

The increase in loss was attributed by Aon to more intense weather events; larger and more urbanized populations in the disaster areas; and widespread supply chain disruption.Wildfires, floods and droughts are all becoming more costly.

Compared to 2017 and 2018, catastrophic losses in 2019 were lower but still totaled $232 billion, $71 billion insured. (Aon's estimates are higher than Munich Re which estimated $150 catastrophic loss, $52 billion insured.)  The top ten 2019 losses were equally divided between inland floods and tropical storms. Monsoon floods in India and China cost the most lives and were longest in duration, five months in India and three in China.

While individual organizations cannot prevent or mitigate the scope of natural disasters - a job for nations and international organizations to the extent humanly possible -they can reduce their own risk of loss. Properties can be made more resistant to natural perils. In some cases organizations will have to relocate or abandon areas that are too risky. Insured values must be kept up to date, and where not covered by standard Property policies specific insurance for flood, earthquake or windstorm will be needed for local conditions.