Nat cat does $270bn in damage in 2021 as secondary perils rise to peak status: Swiss Re
Natural catastrophes rendered $270 billion in economic losses in 2021 and triggered $111 billion in insurance payments, the Swiss Re Institute revealed in its latest sigma report.
The headline sum of economic losses is up 33% year on year and is neighborhood 26% above the ten-year average, data indicated. Nat cat paid losses were up a milder 23% year on year and proved well below the longer-term average.
The quiet underlying story has been building in secondary perils. A spike in peak perils, such as the $30-32 billion Hurricane Ida, only piled on top of a five-year trend for rising secondary perils including 2021's winter storm Uri and European floods.
“Coming after a dip in 2012–2016, however, the higher insured losses of 2017–2021 signal a return to long-term growth trend of 5–7%, rather than a step-change up in claims,” Swiss Re authors claim.
“While we do not see a new norm of higher loss growth rates, regular occurrence of multi-billion insured loss outcomes from secondary peril events is new.”
Floods are overflowing the natural catastrophe charts to drive up the secondary perils count. “Flood affects more people around the world than any other peril,” Swiss Re analysts say of what they consider an under-monitored peril.
Economic losses from floods in 2021 came to $82 billion, some 31% of the global economic losses from natural catastrophe and only 2% less than cyclones, the report indicated. 2021 brought more than 50 severe flood events worldwide.
The protection gap on flooding remains huge. The $82 billion in economic losses only triggered $20 billion in insurance payments.
“There is a large flood protection gap across the world,” the authors claimed. “Insurance has covered just 7% of the aggregate economic losses from flood events in emerging markets in the last 20 years, and 31% in advanced economies.”
Insurers must promote flooding to the rank of a primary peril in terms of modelling and study.
“We believe flood is and will remain insurable,” authors wrote. “To this end, we call on the industry to afford flood risk the same attention as primary perils when it comes to exposure data capturing, sharing and model use, and to enforce the same discipline and adherence to rigorous risk management practices.”
Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
