Extreme weather events in 2021, including a deep winter freeze, floods, severe thunderstorms, heatwaves and a major hurricane, resulted in estimated annual insured losses from natural catastrophes of US$105 billion, the fourth highest since 1970, according to Swiss Re Institute’s preliminary sigma estimates.
Man-made disasters triggered another US$7 billion of insured losses, resulting in estimated global insured catastrophe losses of US$112 billion in 2021, said Swiss Re.
While Hurricane Ida was the costliest natural disaster in 2021, winter storm Uri and other secondary peril events caused more than half of total losses as the effects of wealth accumulation and climate change drive claims in disaster-prone areas, said the report.
The two costliest natural disasters of the year were both recorded in the U.S.: Hurricane Ida and winter storm Uri. (The report was issued before the losses were calculated from the tornadoes that ripped through central U.S. this week).
Hurricane Ida caused US$30-$32 billion in estimated insured damages, including flooding in New York, while winter storm Uri wreaked US$15 billion in insured losses. Uri brought extreme cold, heavy snowfall and ice accumulation, especially in Texas where the power grid experienced multiple failures on account of freezing conditions.
The costliest event in Europe, meanwhile, was the July flooding in Germany, Belgium and nearby countries, causing up to US$13 billion in insured losses, in comparison with economic losses of more than US$40 billion, which indicates a very large flood protection gap in Europe. The flooding was the costliest natural disaster for the region since 1970 and also the world’s second highest, after the 2011 Thailand flood.
“In 2021, insured losses from natural disasters again exceeded the previous 10-year average, continuing the trend of an annual 5–6% rise in losses seen in recent decades. It seems to have become the norm that at least one secondary peril event such as a severe flooding, winter storm or wildfire, each year results in losses of more than US$10 billion,” commented Martin Bertogg, head of Cat Perils at Swiss Re.
“At the same time, Hurricane Ida is a stark reminder of the threat and loss potential of peak perils. Just one such event hitting densely populated areas can strongly impact the annual losses,” he added.
“The impact of the natural disasters we have experienced this year once again highlights the need for significant investment in strengthening critical infrastructure to mitigate the impact of extreme weather conditions,” said Jérôme Jean Haegeli, Swiss Re’s group chief economist.
“Investments in infrastructure support sustainable growth and resilience and need to be upscaled. In the U.S. alone, the infrastructure investment gap to maintain critical and aging infrastructure is US$500 billion on average per year until 2040. Partnering with the public sector, the insurance industry is critical for strengthening society’s resilience to climate risks, by investing in and underwriting sustainable infrastructure,” Haegeli added.
Further devastating secondary peril activity in Europe included severe convective storms in June, with thunderstorms, hail and tornadoes causing widespread damage to property in Germany, Belgium, the Netherlands, Czech Republic and Switzerland. The resulting insured losses are estimated at US$4.5 billion. Elsewhere in the world, continued, Swiss Re, there were severe flooding events in China’s Henan province and British Columbia in Canada, among others.
On the other end of the extreme weather spectrum, Canada, adjacent parts of the U.S. and many parts of the Mediterranean experienced record temperatures in 2021. During the last days of June, a “heat dome” set a new all-time Canadian temperature record of nearly 50°C (122°F) in a village in British Columbia, the sigma report said. Temperatures in the Death Valley, Calif. reached 54.4°C (129.9°F) during one of multiple heatwaves in the southwest.
The exceptional heat was often accompanied by devastating wildfires, said Swiss Re, noting, however, that the associated insured losses were lower than in recent years, when the fires affected more populated areas. In California, wildfires destroyed, in particular, large forest areas but in contrast to 2017, 2018 and 2020, encroached on areas of lower property concentration.
These sigma catastrophe loss estimates are for property damage and exclude claims related to COVID-19. Swiss Re said loss estimates are preliminary and are subject to change as not all loss-generating events have been fully assessed, such as December catastrophe activity. COVID-19 has elongated the claims lifecycle, particularly for large events, and it will take considerably longer than normal to assess the final tally, said Swiss Re.
Photograph: A woman looks at cars and houses damaged after flooding in Liege, Belgium, Monday, July 19, 2021. Residents in several provinces continued to clean up after severe flooding in Germany and Belgium turned streams and streets into raging torrents that swept away cars and caused houses to collapse. Photo credit: AP Photo/Valentin Bianchi.
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