With overall losses of around $270bn (previous year $320bn) and insured losses of roughly $120bn (previous year $120bn), 2022 joins the recent run of years with high losses, said Munich Re in a recent report.
Overall losses were close to the average for the last five years, while insured losses were significantly above average (2017–2021: $97bn). The continued high level of insured losses is impacting insurers at a time when they are having to deal with both high inflation rates and a shrinking capital base due to rising interest rates. In contrast, the positive effect on investments from higher interest rates will only come in time.
“Two factors should be kept in mind when considering the 2022 natural disaster figures. Firstly, we are experiencing La Niña conditions for the third year in a row. This increases the likelihood of hurricanes in North America, floods in Australia, drought and heatwaves in China, and heavier monsoon rains in parts of South Asia. At the same time, climate change is tending to increase weather extremes, with the result that the effects sometimes complement each other,” said Munich Re chief climate scientist Ernst Rauch.
Hurricane Ian accounted for more than one-third of overall losses and for roughly half of insured losses worldwide, said the report. According to provisional estimates, it caused overall losses of around $100bn, of which $60bn was insured (not including National Flood Insurance Program for private homeowners). In terms of insured losses adjusted for inflation, Ian was the second-costliest tropical cyclone on record after hurricane Katrina in 2005.
The year’s second costliest and greatest humanitarian disaster was severe flooding in Pakistan resulting from record-breaking monsoon rainfall. At least 1,700 people were killed while direct losses are estimated to be at least $15bn, with almost nothing insured and countless people losing all their belongings. Researchers estimate that the intensity of an event of this kind has already increased by half because of climate change, compared to a world without global warming, and that it will continue to rise in the future.
For insurers, the second-costliest single natural disaster in 2022 was flooding in the southeast of Australia in February and March. Of the overall losses of approximately $6.6bn, just under $4bn was insured. Overall, floods in Australia caused losses of $8.1bn last year, of which $4.7bn was insured. M