Aon finds climate-influenced weather is key driver of $268B global damage from 2020 natural disasters, with 64% of losses uninsured
When natural disasters and a pandemic collide: Global annual report explores “connected extremes”
Chicago, IL (Jan. 25, 2021) – Aon plc, a leading global professional services firm providing a broad range of risk, retirement and health solutions, is pleasaed to announce the launch of its global Weather, Climate & Catastrophe Insight: 2020 Annual Report. The report evaluates the impact of global natural disaster events to identify trends, manage volatility and enhance resilience.
The report reveals that the 416 natural catastrophe events of 2020 resulted in economic losses of USD268 billion – 8% above the average annual losses for this century – as costs continue to rise due to a changing climate, more people moving into hazard-prone areas and an increase in global wealth. Of this total, private sector and government-sponsored insurance programs covered USD97 billion, creating a protection gap of 64%, which is the portion of economic losses not covered by insurance. This highlights the importance of addressing the underserved by ensuring that there is increased access to affordable insurance products in the future.
“The global response to the socioeconomic volatility caused by the COVID-19 pandemic has increased focus on other systemic risks – particularly climate change – and is causing a fundamental reordering of business priorities. This report highlights the increasing likelihood of ‘connected extremes’ and reinforces that leading organizations of the future will be defined by their ability to manage the global implications of concurrent catastrophic events,” said Greg Case, CEO of Aon. “In a highly volatile world, risk remains ever present, is more connected and, as a result, is also more severe – and 2020 has underscored this reality. It has also emphasized the need for enhanced collaboration between the public and private sectors, which will be essential to close the rising protection gap and build resilience against natural catastrophes.”
During the year, more than 8,000 people lost their lives due to natural catastrophes. Tropical cyclone was the costliest peril, causing more than USD78 billion in direct economic damage. It was closely followed by flooding (USD76 billion) and severe convective storm (USD63 billion). From a climate perspective, NOAA cited 2020 as the world’s second-warmest since 1880 for land and ocean temperatures at +0.98°C (+1.76°F) above the 20th-century average.
Steve Bowen, Director and Meteorologist for Aon’s Impact Forecasting team, commented: “The world continues to evolve as it is faced with new challenges around natural perils. While many private and public sector entities primarily focus on physical and human hazard risks, an increasing number of global regulative bodies are further pivoting towards how to handle emerging transitional and subsequent reputational risks. This is especially true as the financial and humanitarian risks surrounding climate-enhanced events become more evident on a daily basis. Focus at the corporate and federal levels will be critical around investments in risk mitigation, resilience, and sustainability as the landscape around climate change solutions continues to accelerate with renewed urgency.
Significant regional events during 2020 included:
- Costliest year on record for global severe convective storms led by historic U.S. derecho
- U.S. mainland endured a record-breaking 12 named storm landfalls, including six hurricanes
- Super Typhoon Goni struck the Philippines as the strongest landfalling storm ever recorded globally at 195 mph
- Ciara became Europe’s costliest windstorm since Xynthia in 2010
- Drought conditions reduced agricultural crop yields in Brazil and Argentina, burning 30% of the Pantanal Region
- The most widespread Yangtze River Basin floods since 1998 caused USD35 billion of economic damage in China’s monsoon season
Top 10 Global Economic Loss Events
- Seasonal Floods
- June – September, in China
- Deaths: 280
- Economic Loss: 35 bn USD
- Insured Loss: 2 bn USD
- Hurricane Laura
- August 21 – 29, in U.S. & Caribbean
- Deaths: 68
- Economic Loss: 18.2 bn USD
- Insured Loss: 10 bn USD
- Cyclone Amphan
- May 15 – 21, in South Asia
- Deaths: 133
- Economic Loss: 15 bn USD
- Insured Loss: 0.5 bn USD
- SCS (incl. Midwest Derecho)
- August 8 – 12, in United States
- Deaths: 4
- Economic Loss: 12.6 bn USD
- Insured Loss: 8.3 bn USD
- Kyushu Floods
- July 3 – 15, in Japan
- Deaths: 82
- Economic Loss: 8.5 bn USD
- Insured Loss: 2 bn USD
- Hurricane Eta
- November 2 – 13, in Caribbean & U.S.
- Deaths: 309
- Economic Loss: 8.3 bn USD
- Insured Loss: 0.7 bn USD
- Seasonal Floods
- June – September, in India
- Deaths: 1922
- Economic Loss: 7.5 bn USD
- Insured Loss: 0.8 bn USD
- Hurricane Sally
- September 14 – 18, in United States
- Deaths: 0
- Economic Loss: 7 bn USD
- Insured Loss: 3.5 bn USD
- Zagreb Earthquake
- 22-Mar, in Croatia
- Deaths: 2
- Economic Loss: 6.1 bn USD
- Insured Loss: 0.1 bn USD
- Hurricane Isaias
- July 30 – August 5, in U.S., Caribbean & Canada
- Deaths: 18
- Economic Loss: 5 bn USD
- Insured Loss: 2.7 bn USD
- All other events:
- Economic Loss: 145 bn USD
- Insured Loss: 66 bn USD
TOTAL Economic Losses: 268 billion USD
TOTAL Insured Losses: 97 billion USD
Notes: Subject to change as loss estimates are further developed; Includes losses sustained by private insurers and government-sponsored programs.
The full report and a short film are available on Aon’s interactive microsite at https://aon.io/3nsM7cu. To access current and historical natural catastrophe data, as well as event analysis, please visit catastropheinsight.aon.com.
View the infographic (PDF).
About Aon
Aon plc (NYSE:AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance. For more information, visit www.aon.com.
About HSCM Bermuda
HSCM Bermuda is an asset manager focused on investments in the Re/Insurance and Transportation sectors. HSCM was launched in 2016 and focuses on core economic sectors that are likely to outgrow global GDP, offer low correlations with broader markets and are experiencing a shift from balance sheet and to market financing. For more information, visit www.hscm.com.
Source: Aon
Tags: Aon, climate change, flood, hurricanes, insured damage, Natural Catastrophes, natural disaster losses, storm surge damage
