COVID-19 Is a Global Battle. But Climate Change Is Still the World’s War, According to Swiss Re
After a community is struck by a natural disaster, it’s easy to see the physical damage. Power lines may be downed after a hurricane or tornado. Water stains mark the siding of houses after a flood retreats.
While it’s easy to see the physical damage, it can be harder to translate these losses into economic terms. Natural catastrophes, or Nat CATs, can result in both visible losses, such as severe property damage, and invisible ones, including prolonged business interruption.
As global climate change causes an uptick in natural disasters, so too will insurance costs climb.
The costs of these events can amount to millions in economic losses, many of which are not covered by insurance. Swiss Re’s annual Natural Catastrophes Sigma takes a look at the economic losses caused by natural and man-made disasters in 2019.
The Report By the Numbers
- Globally, disaster events cost $146 billion in economic losses in 2019.
- $60 billion of those losses were covered by insurance.
- Natural disasters made up $137 billion of these losses and man-made events accounted for $9 billion in losses.
- Disaster events cost less in 2019 than they did in 2018 when they amounted to $176 billion in total losses, with $93 million of these losses covered by insurance.
- Over the last three years, climate change has caused $650 billion in economic losses globally, according to a report from Morgan Stanley.
Floods Are a Major Uninsured Nat CAT Risk
As temperatures continue to warm, Swiss Re reports that Nat CATs will continue to result in major economic losses.
One area where losses are expected to increase is flood insurance. The National Oceanic and Atmospheric Administration predicts that flooding will be widespread during the spring of 2020, with 23 states expected to experience moderate flooding.
Despite how global climate change has caused flooding to be widespread, many homeowners don’t have flood insurance. Swiss Re reports that five out of every six U.S. households don’t have flood insurance, and people continue to build in flood plains, despite previous losses.
Houses aren’t the only structures at risk due to increased flooding, however.
Aspects of the nation’s infrastructure, including levees and dams, are being damaged as well. Nearly $80 billion will be needed to improve and maintain the nation’s levees over the next 10 years, according to estimates from The American Society of Civil Engineers.
Climate change isn’t going away anytime soon and neither are its risks. A recent survey found that 73% of U.S. brokers consider climate change a top long-term priority.
Climate change’s risks aren’t just limited to major natural disasters. As the earth continues to warm, food shortages and the loss of tillable soil are also major risks.
Litigation around climate issues could also increase as attribution science progresses and as people look for someone to blame for rapid climate change.
While climate change and increased flooding will remain a major risk for years to come, this startup is mapping flood risk more effectively than FEMA. &