‘Act now or suffer the consequences’ Reinsurers worry about global climate change inaction after a destructive US hurricane season and massive wildfires By Bernice Han
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he world’s largest reinsurers have highlighted the increasing cost of natural disasters, warning that concerted action to reduce the causes of climate change is becoming increasingly important. Munich Re says weather-related events in the US in 2020 are a reminder to the rest of the world about the price of inaction on climate change. It says political leaders have struggled to present a united front to reduce greenhouse gas emissions since the Paris Agreement came into force in 2016. The German reinsurer says natural disaster losses and the severity of perils will worsen if the world continues to shrug off the impacts of climate change. The financial consequences are clear, with global economic losses last year about $US44 billion above the 2019 total. “Natural catastrophe losses in 2020 were significantly higher than in the previous year,” Munich Re board member Torsten Jeworrek says in a report on last year’s natural disasters. “Record numbers for many relevant hazards are a cause for concern, whether we are talking about the severe hurricane season, major wildfires or the series of thunderstorms in the US. “Climate change will play an increasing role in all of these hazards. Five years ago in Paris the global community set itself the target of keeping global warming well below 2 degrees Celsius. It is time to act.” Swiss Re has taken a similar line in its roundup of 2020’s global natural catastrophes, which estimates insured losses at $US76 billion, up 40% from 2019. Including man-made disasters, total insured losses came to $US83 billion, the fifth costliest year for the industry since 1970. The Zurich-based reinsurer says the losses were driven by a record number of severe convective storms – thunderstorms with tornadoes, floods and hail – and
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wildfires in the US. These and other secondary peril events in the US, which accounted for 70% of insured losses caused by natural disasters last year, are expected to worsen because of climate change. “As with COVID-19, climate change will be a huge test of global resilience,” Swiss Re’s Chief Economist Jerome Jean Haegeli says. “Neither pandemics nor climate change are ‘black swan’ events. But while COVID-19 has an expiry date, climate change does not, and failure to ‘green’ the global economic recovery now will increase costs for society in future.” The reinsurers’ reports are matched by a separate assessment from Aon, which says 76% of the $US97 billion in insured losses recorded last year came from the US and the 10 leading insured events all took place there. Of the 28 individual disaster events that crossed the billion-dollar claims loss mark, 22 occurred in the US. Overall economic damages from natural catastrophes were around $US268 billion, Aon says. The US share of economic damages was about 44%. Apart from a hyperactive hurricane season that rewrote the record books, severe convective storms proved equally damaging. A rare derecho – a line of thunderstorms with widespread damaging winds – generated damage of $US11 billion when it pummeled the Midwest region in August. Munich Re’s report puts the US share of the $US210 billion in overall economic losses caused by natural perils last year at 45% or $US95 billion, more than any other country. When measured on an insured loss basis, the world’s largest economy also occupied top spot, accounting for 82% or $US67 billion of the $US82 billion that insurers
