Munich Re – Climate change is making natural catastrophes more extreme

The most expensive natural disaster was hurricane Ian in 2022, which caused devastating damage, especially in the US state of Florida, at the end of September with wind speeds of almost 250 kilometers per hour. Insurers had to reimburse around USD 80 billion of the total loss of USD 100 billion. A third of the total losses and around half of the insured losses worldwide were attributable to “Ian”. Adjusted for inflation, only Hurricane Katrina in 2005 was more expensive.

In the meantime, numerous reinsurers are no longer willing to cover such risks in the south-east of the USA due to the frequency of storms. The prices for natural disaster protection have been rising for years. “For us at Munich Re, none of this comes as a surprise. We are prepared for far greater losses,” said Rauch. The world market leader is still basically willing to expand the business “if the premiums are technically at a risk-adequate level – but of course that doesn’t go at random”.

The second largest natural disaster of the past year was the monsoon in Pakistan. Rains that were five to seven times heavier than usual led to flooding in August. 1,700 people died and the damage is estimated at 15 billion dollars. “Almost nothing was insured,” explained Munich Re. “Natural disasters hit people in poorer countries particularly hard,” said Blunck. Insurers and reinsurers had to pay USD 4.7bn for two waves of flooding in south-east Australia, with a total loss of USD 8.1bn. Hailstorms in France caused damage of 7.2 billion dollars, 5.6 billion of which was borne by insurers.

In Europe, too, homeowners, real estate developers and municipalities too often ignored the increasing danger. “They all have to take the natural hazards arising from climate change into much greater consideration,” Rauch warns. Too much construction is still going on in flood areas and on coasts. The chief climatologist is pushing for adaptation to climate change. “That’s the quickest way.” When it comes to avoiding emissions, the system is far too sluggish. “We have to act now and need answers for a transitional period.”

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