Global insured catastrophe losses rise to $112 billion in 2021
Extreme weather events in 2021 resulted in annual insured losses from natural catastrophes estimated at US$105 billion, the fourth highest since 1970, according to Swiss Re Institute's preliminary sigma estimates
While Hurricane Ida was the costliest natural disaster in 2021, winter storm Uri and other secondary peril events caused more than half of total losses as wealth accumulation and climate change effects in disaster-prone areas drive claims. Man-made disasters triggered another $7 billion of insured losses, resulting in estimated global insured losses of $112 billion in 2021.
Martin Bertogg, Head of Cat Perils at Swiss Re, commented: “In 2021, insured losses from natural disasters again exceeded the previous ten-year average, continuing the trend of an annual five-to-six-per-cent rise in losses seen in recent decades.
“It seems to have become the norm that at least one secondary peril event such as a severe flooding, winter storm, or wildfire, each year results in losses of more than $10 billion. At the same time, Hurricane Ida is a stark reminder of the threat and loss potential of peak perils. Just one such event hitting densely populated areas can strongly impact the annual losses.”
The two costliest natural disasters of the year were both recorded in the US. Hurricane Ida wreaked $30 to $32 billion in estimated insured damages, including flooding in New York, and winter storm Uri caused USD billion in insured losses.
The costliest event in Europe meanwhile was the July flooding in Germany, Belgium, and nearby countries, causing up to $13 billion in insured losses, in comparison with economic losses of above $40 billion.
This indicates a still very large flood protection gap in Europe. The flooding was the costliest natural disaster for the region since 1970 and the world's second highest, after the 2011 Thailand flood.
Highlighting the need for better infrastructure
“The impact of the natural disasters we have experienced this year once again highlights the need for significant investment in strengthening critical infrastructure to mitigate the impact of extreme weather conditions,” said Jérôme Jean Haegeli, Swiss Re's Group Chief Economist. “Investments in infrastructure support sustainable growth and resilience and need to be upscaled. In the US alone, the infrastructure investment gap to maintain critical and aging infrastructure is $500 billion on average per year until 2040.”
On the other end of the extreme weather spectrum, Canada, adjacent parts of the US and many parts of the Mediterranean experienced record temperatures in 2021. During the last days of June, a ‘heat dome’ set a new all-time Canadian temperature record of nearly 50°C in a village in British Columbia. Temperatures in the Death Valley, California reached 54.4°C during one of multiple heatwaves in the southwest. The exceptional heat was often accompanied by devastating wildfires. However, the associated insured losses were lower than in recent years when the fires affected more populated areas. In California, wildfires destroyed large forest areas but in contrast to 2017, 2018 and 2020, encroached on areas of lower property concentration.
These sigma catastrophe loss estimates are for property damage and exclude claims related to Covid-19. Loss estimates in this media release are preliminary and are subject to change as not all loss-generating events have been fully assessed yet. For example, catastrophe activity in December has remained elevated and resulting losses are still being assessed. Covid-19 has elongated the claims lifecycle, particularly for large events, and it will take considerably longer than normal to assess the final tally.