Rising Severity of Weather Events Pushes Costs to Record Highs, Prompting Calls for Better Prevention Measures
The global financial impact of natural disasters in 2024 has reached a staggering US$438.6 billion (S$320 billion), with climate change being identified as a significant driver of this increase. According to reinsurance company Munich Re, weather-related disasters caused by a warming planet were responsible for 93% of the total losses and a remarkable 97% of insured losses.
This year marks the third most expensive year for the insurance industry since 1980, according to Munich Re’s annual report on natural catastrophes. While the human toll of these disasters has been somewhat lower, with approximately 11,000 lives lost compared to the decade’s average of 17,500, the financial losses are far more severe. Of the total damages, a shocking US$180 billion were uninsured, highlighting the vulnerability of many regions.
Tobias Grimm, Munich Re’s chief climate scientist, noted that “climate change is showing its claws,” warning that the planet’s weather system is shifting to “a higher gear,” leading to more frequent and extreme weather events.
Among the deadliest and most expensive events of the year were Japan’s New Year earthquake, which resulted in 245 deaths and US$15 billion in damages, and Typhoon Yagi, which caused US$14 billion in losses across Southeast Asia. In China, flooding between June and July brought US$12 billion in damages, with just a fraction covered by insurance.
The costliest disasters were the hurricanes Helene and Milton, which devastated the US in September and October, causing 254 fatalities and US$94 billion in damages, of which US$41 billion was insured. Similarly, catastrophic floods in Spain led to 229 deaths and US$11 billion in damages, with insurance covering only a small portion of the costs.
In addition to floods, tornadoes, hailstorms, and wildfires also inflicted severe damage worldwide, underscoring the growing risk of natural catastrophes. Munich Re’s board member, Dr Thomas Blunck, stressed the urgent need for societies to prepare for even more extreme weather events, emphasising that understanding the role of climate change in these disasters has become clearer due to advances in climate attribution science.
Studies from World Weather Attribution (WWA) have shown that climate change significantly increased the severity of both Hurricane Helene and Typhoon Milton. In the case of Helene, climate change amplified rainfall by 10% and wind speeds by 21 km/h (11%). The floods in Spain were found to be 12% more intense and twice as likely to occur due to global warming.
As the frequency and severity of natural disasters continue to rise, insurance premiums are expected to climb as well. Grimm highlighted that rising premiums are an unavoidable consequence of increasing losses, but improvements in construction standards and greater investment in disaster prevention could help mitigate these costs in the future.
While early-warning systems have helped reduce fatalities, Grimm argued that more investment in proactive measures is essential. He called for governments to prioritise mitigation efforts rather than relying solely on post-disaster financial aid.
The financial strain caused by escalating extreme weather events is felt globally, but the heaviest burdens are borne by poorer nations, where limited insurance coverage and governmental support leave communities vulnerable to catastrophic losses.
