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Insured Losses From Natural Disasters Hit $140B as Climate Change ‘Shows Its Claws’

Insurers saw the third most expensive year for natural catastrophe losses in 2024 – reaching a total of US$140 billion – as climate change “is showing its claws,” according to Munich Re.

Overall economic losses from natural disasters worldwide reached US$320 billion in 2024, compared to US$268 billion in 2023 when adjusted for inflation, Munich Re said in its report, titled “Climate change is showing its claws: The world is getting hotter, resulting in severe hurricanes, thunderstorms and floods.”

Munich Re’s insured loss estimate topped Swiss Re’s nat cat estimate of $135 billion issued in December. Swiss Re noted that insured losses in 2024 surpassed $100 billion for the fifth consecutive year. (For Munich Re’s full-year nat cat fact sheet, click here.)

The overall losses and, even more so, the insured losses in 2024 were much higher than the inflation-adjusted averages of the past 10 and 30 years, said the Munich Re report, pointing to the fact that total 10- and 30-year economic losses were $236 billion and $181 billion, respectively, while insured loss averages were $94 billion and $61 billion, respectively.

Losses from non-peak perils – also known as secondary perils – such as floods, wildfires, and severe thunderstorms were again substantial, producing total losses of $136 billion, of which approximately $67 billion were insured.

This is slightly below the figures from 2023 when overall economic losses totaled $143 billion and insured losses reached a record $82 billion. However, economic and insured losses from these non-peak perils were well above the average figures of the past 10 years of $110 billion and $48 billion, respectively (adjusted for inflation).

“It is striking that, from a long-term perspective, non-peak perils are increasingly fueling the trend of rising losses, while peak risks like tropical cyclones and earthquakes continue to be a source of loss volatility,” Munich Re said.

In 2024, tropical cyclones alone contributed $135 billion to the total losses and $52 billion to insured losses, said the report, noting that the majority of these losses were caused by major U.S. hurricanes with overall losses of more than $105 billion, of which $47 billion were insured.

Severe Convective Storms

In addition to hurricanes, severe thunderstorms (also known as severe convective storms) also caused enormous damage.

In just the U.S., these storms were responsible for $57 billion in overall losses, of which $41 billion were insured, said the report, which noted that the sums are only slightly below the previous year’s record figures of $66 billion and $51 billion, making 2024 the second costliest year for this kind of storm.

“One record-breaking high after another – the consequences are devastating. The destructive forces of climate change are becoming increasingly evident, as backed up by science. Societies need to prepare for more severe weather catastrophes,” said Thomas Blunck, member of the Board of Management, in a statement.

Climate Change Shows Its Claws

Describing climate change as “showing its claws” and “taking the gloves off,” Munich Re said, weather-related catastrophes were the dominant natural catastrophe in 2024 – responsible for 93% of overall losses and 97% of insured losses. “The world is getting hotter, resulting in severe hurricanes, thunderstorms and floods.”

Last year’s losses made the consequences of global warming very clear, Munich Re said, pointing to the fact that annual average temperatures reached around 1.5°C above pre-industrial levels for the first time, which surpassed the previous record from 2023, Munich Re said. “This makes the past 11 years the warmest since the beginning of systematic record-keeping.” (Editor’s note: The goal of the 2015 Paris Agreement was to limit global warming to 1.5 degrees Celsius, or 2.7 degrees Fahrenheit, above pre-industrial levels, in order to prevent the potentially irreversible effects of climate change.)

“[I]n many regions, severe thunderstorms and heavy rainfall are becoming more frequent and more extreme,” the report said. “Although tropical cyclones are not generally increasing in number, the proportion of extreme cyclones is growing. They, in turn, are rapidly intensifying and bringing extreme precipitation with them.”

Increased Storm Severity

This was the case with Hurricanes Helene and Milton, which studies have shown “were significantly more severe and brought much more extreme rainfall than in a hypothetical world without climate change,” said Munich Re, quoting two reports from World Weather Attribution.

Munich Re cited another study from World Weather Attribution which found that climate change made the flash floods in the Valencia region of Spain twice as likely to occur.

“The physics are clear: The higher the temperature, the more water vapour and therefore energy is released into the atmosphere. Our planet’s weather machine is shifting to a higher gear,” said Chief Climate Scientist Tobias Grimm, in the report.

Other findings from the report include:

• Hurricanes Helene and Milton, which struck the U.S. in September and October, respectively, were the most destructive disasters of 2024. Helene resulted in the largest overall losses from natural disasters in 2024 at $56 billion, $16 billion of which were borne by insurers. Hurricane Milton produced the highest insured losses of the year, totaling $25 billion with an overall loss figure was $38 billion.

• The third costliest natural disaster of the year in terms of overall losses was the magnitude 7.5 earthquake in Japan, which shook the country’s west coast on New Year’s Day 2024. Overall losses were estimated at $15 billion, with insured losses totaling around $2.5 billion.

• North America (including Central America and the Caribbean) once again reported the highest share of global natural catastrophe losses, and a higher proportion than usual (about 60% of total losses, 10-year average 54%). In total, losses amounted to around $190 billion, of which around $108 billion were insured.

• In Europe, natural disasters destroyed assets worth $31 billion last year, of which $14 billion were insured. The most serious catastrophe was extreme flooding in Spain near the provincial capital of Valencia. At least 200 people lost their lives, making it the deadliest natural disaster Spain has seen in 50 years. Total damage amounted to around $11 billion, $4.2 billion of which were insured. Floods in Germany and neighboring countries in June and in Central/Eastern Europe in September also caused damage totaling more than $9 billion, of which insurance covered $4 billion.

• In the Asia-Pacific region and Africa, total losses of around $91 billion were higher than in the previous year ($66 billion) and also higher than the 10-year average of $66 billion. At around $16 billion, insured losses were significantly higher than in the previous year ($10 billion). In addition to the earthquake in Japan and Typhoon Yagi, losses were driven by an extreme flood catastrophe in the United Arab Emirates, which hit the metropolis of Dubai as well as neighboring countries. Total losses amounted to $8.3 billion, of which $2.8 billion were insured.

• Around 11,000 people lost their lives as a result of natural disasters in 2024, significantly fewer than the average. The natural disaster with the highest death toll was Typhoon Yagi; around 850 people were killed when it hit the Philippines, the Chinese island of Hainan, the southern tip of the Chinese province of Guangdong, Vietnam and Myanmar in September. Included in the total number of lives lost were more than 200 people during Hurricane Helene, more than 200 during Japan’s New Year’s Day earthquake, and least 200 people in the Valencia floods.