Climate Change

Climate disaster costs to double in 10 years

Swiss Re’s analysis of damage caused by extreme events in 2023

(sustainabilityenvironment.com) – In 2023, extreme events due to the climate crisis and natural disasters (such as the earthquake in Turkey) caused damage worth US$291 billion worldwide. Of which only $1/3, $108 billion, were covered by insurance policies. But with the effects of climate change intensifying, the costs of climate disasters could double in 10 years.

Swiss Re, the Swiss insurance company that recently published the annual report on the costs of climate disasters, says so. The figure is slightly lower than that of 2022 when the total had reached 295 billion $. But it is much higher than the average of the last 10 years, stops at 235 billion $.

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Future trends in climate disasters costs

The trend is clear. Based on the GDP, Swiss Re estimates that the weight of insurance losses due to extreme events has more than doubled in the last 30 years. According to the assessment of the insurance company, the trend is an increase in the long-term trend rate of 5-7%. It means that within 10 years the costs of climate disasters could double compared to today.

“So far, economic growth, urbanization and the consequent accumulation of assets to be secured have been the main drivers of increased losses,” the report says. And even though the impact of climate change to date has been “limited“, “the contribution of more frequent and serious weather events to the damage looks set to increase in the future”.

It is precisely the frequency that Swiss Re puts under the microscope. Last year 142 extreme events caused damage to insured assets, “a new record”. To grow in number are mainly events cataloged as of medium severity, ie that cause damage between 1 and 5 billion $.

The special observed is the category of convective storms, which has become the second cause of damage worldwide. In 2023, they caused $64 billion in damages, which is also a record. And if the largest share is located in the United States, this type of event is causing more and more damage in Europe. “Losses are currently growing faster in Europe, where they have exceeded $5 billion in each of the last three years, with hail storms as the main cause,” the report concludes. In Italy, according to a report by Censis and Confcooperative, 25% of SMEs are at high risk.

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