Natural catastrophe losses in 2024 reached $417 billion, insured losses – $154 billion
Global natural risks in the world caused $417 billion in direct economic losses in 2024. The insurance industry covered $154 billion of these losses, but a significant gap in protection of $263 billion remained.
A Gallagher Re report, cited by Beinsure, on natural catastrophes and climate change, highlights a worrying trend: economic losses in 2024 exceeded the average for the past decade by 15% and for 20 years by 16%. There were 60 events with losses exceeding $1 billion worldwide, of which at least 33 were in the United States. This data indicates the growing impact of climate change and the financial burden on the insurance industry.
Insured losses from natural disasters in 2024 exceeded both the 10-year and 20-year averages. The insurance industry (private and public sectors) covered $154 billion in losses, 27% above the 10-year average and 44% above the 20-year average.
The report singles out severe convective storms (SCS) as the primary cause of these losses. They accounted for 41% of all insured losses worldwide. The report also highlights the importance of public-private partnerships and increasing insurance coverage in regions with traditionally low coverage. Despite efforts, a significant gap in protection remains, leaving vulnerable communities without adequate insurance coverage.
“The overall economic burden in 2024 was not a record, but it once again highlighted the world’s vulnerability to more expensive ‘atypical’ catastrophes that hit densely populated centres. This again proves the importance of this risk for the global insurance and reinsurance industry.”
Gallagher Re also notes that the annual level of insured losses is growing faster than overall economic losses.
The need for guarantees to finance natural catastrophes or climate change for mitigation, adaptation or transition to green energy sources is critical, especially given the complexity of the combined risks.
“While 2024 was not a record year for overall losses, we continue to see the impact of climate change on the behavior of individual events and overall weather trends,” the analysts say. “2024 is officially the warmest year on record, and scientists believe it was the warmest in 125 years. Scientific research shows differences in the impact of climate change on certain types of risks and how it will affect certain regions.”
Economic and insured losses from natural disasters
The footprint of climate risks is undoubtedly present in many events. However, climate risks are not limited to physical losses. The non-physical consequences are also significant. They can affect real estate, agriculture, industry, healthcare, pensions and investment strategies.
“Reducing greenhouse gas emissions is key to this process. This will be important to stabilize or reduce the impact of future extreme weather events. The insurance industry has an important role to play in addressing this issue, but this requires collective work with other private and public sector actors,” the report states.