The economic consequences of natural disasters reached alarming dimensions in 2024. Munich Re puts the total global losses at 320 billion dollars, of which 140 billion dollars were covered by insurance. This makes last year one of the most expensive since records began. Hurricanes, floods and forest fires in particular caused high costs and highlight the growing risks posed by climate change.
The most expensive disasters of the year
Hurricane Helene caused the most damage at USD 56 billion, of which only USD 16 billion was insured. Hurricane Milton caused damage totalling 38 billion dollars, with insurance cover of 25 billion dollars.
The earthquake in Japan on New Year’s Day 2024 also caused considerable devastation, with damage totalling 15 billion dollars. Floods in Brazil, Valencia and Dubai exacerbated the global challenges.
Climate change as a driver of extreme weather events
Studies show that climate change is increasing the frequency and intensity of extreme weather phenomena. Although the number of tropical storms is not increasing, their destructive power is growing. 93 per cent of total global losses and 97 per cent of insured losses were caused by weather catastrophes.
The increasing risks lead to higher insurance premiums. Particularly vulnerable regions with weak insurance cover are facing enormous challenges. Natural disasters claimed around 11,000 lives in 2024. Fewer than in previous years, but still significant.
Insurance industry under pressure
The costs of natural disasters are well above the average values of recent decades. The 30-year average of total losses is 181 billion dollars, the 10-year average 236 billion dollars. The loss amount of 320 billion dollars in 2024 shows the increasing threat.
Rising insurance claims increase premiums and risk assessments. Regions with a high catastrophe risk could become more difficult to insure in future. At the same time, government protection measures are needed to protect private individuals and companies from the financial consequences of extreme weather events.
Prevention is the key
The rising costs of extreme weather events require investment in climate-resilient infrastructure. Tobias Grimm, Chief Climatologist at Munich Re, emphasises: “Everyone pays the price for worse weather extremes, but especially people in less insured countries with little financial strength for reconstruction.” The insurance industry and politicians are called upon to develop sustainable strategies to strengthen resilience. Only with preventive measures can the burden of climate disasters be reduced in the long term.
