The global insurance and reinsurance industry faced $111 billion of natural catastrophe losses in 2021, according to Swiss Re, which is a 6% increase on its $105 billion estimate from December.
Global economic losses from natural catastrophes are estimated at $270 billion, making the protection gap significant again as just 41% of economic losses were covered by insurance and reinsurance, Swiss Re’s latest sigma report shows.
Importantly, Swiss Re highlights the trend in insured losses, saying that it is now evident there is a long-term trend of insured losses increasing by an average of 5-7% annually worldwide.
Secondary perils again drove the majority of insured losses around the world, with flooding a particularly costly contributor on an economic basis, but less so on an insured.
Foods accounted for 31% of global economic losses from natural catastrophes in 2021, which was only 2% less than tropical cyclones, Swiss Re said.
But, with floods causing an economic loss of $82 billion, the insured loss figure of $20 billion indicates a particularly large protection gap for the flood peril.
“Floods affect nearly a third of the world population, more than any other peril. In 2021 alone, we witnessed more than 50 severe flood events across the world,” explained Martin Bertogg, Head of Catastrophe Perils at Swiss Re. “Given the scale of devastation, flood risk deserves the same attention and risk assessment rigour as primary perils such as hurricanes.”
“Growing losses from floods are becoming ever more apparent,” added Jérôme Jean Haegeli, Swiss Re’s Group Chief Economist. “Last year we had another wake-up call. There is a growing urgency for action to increase the resilience of societies worldwide. Together with the public sector, re/insurers are well equipped to steer development away from high-risk areas and invest in protective measures such as green infrastructure. This keeps assets insurable while also improving the growth outlook.”
At $111 billion, Swiss Re puts the 2021 catastrophe years as the fourth most costly on-record for the global insurance and reinsurance industry.
Back in December, Swiss Re preliminarily estimated nat cat losses for 2021 at $105 billion.