Cumulative global insured losses by peril in 2021. Aggregated costs for insurers have been largely dominated by the Tropical Cyclone and Severe Weather perils this century. The two perils combined for more than $1 trillion, or 60 percent of the total cumulative industry losses, of which roughly 74 percent was incurred in the United States. The Severe Convective Storm peril has also increasingly separated itself as accounting for the highest number of billion-dollar events. Graphic: Aon
Cumulative global insured losses by peril in 2021. Aggregated costs for insurers have been largely dominated by the Tropical Cyclone and Severe Weather perils this century. The two perils combined for more than $1 trillion, or 60 percent of the total cumulative industry losses, of which roughly 74 percent was incurred in the United States. The Severe Convective Storm peril has also increasingly separated itself as accounting for the highest number of billion-dollar events. Graphic: Aon

CHICAGO, 25 January 2022 (Aon) – Aon plc (NYSE: AON), a leading global professional services firm, today published its 2021 Weather, Climate and Catastrophe Insight, which evaluates the increasing frequency and severity of disruptive natural disasters and how their resulting economic losses are protected globally. This data serves as the foundation for insights that can help business leaders quantify and qualify catastrophe-related risk and assess how their organizations can increase resilience amid an increasingly volatile climate.

Hourly observed rainfall in Zhengzhou on 19-21 July 2021 (mm). A historic volume of rainfall during a 72-hour period created catastrophic flooding and subsequent damage throughout Zhengzhou and neighboring communities. For one 24-hour period alone ending during the morning of 21 July 2021, a remarkable 612.9 millimeters (24.13 inches) of rain fell. This compared to total annual average rainfall of 640.8 millimeters (25.23 inches). Between 4 and 5 PM local time on 20 July 2021, Zhengzhou registered 201.9 millimeters (7.95 inches) of rain. The graphic below highlights hourly rainfall from July 19 to July 21. The flooding led to more than 552,000 filed insurance claims, with the local Henan insurance industry citing total losses of $1.9 billion. This marked the costliest weather event ever recorded for Chinese insurers. The overall economic cost in Henan was listed at ¥120 billion ($19 billion), with a sizeable portion occurring in Zhengzhou. Data: CMA, NASA / GPM. Graphic: Aon (Catastrophe Insight)
Hourly observed rainfall in Zhengzhou on 19-21 July 2021 (mm). A historic volume of rainfall during a 72-hour period created catastrophic flooding and subsequent damage throughout Zhengzhou and neighboring communities. For one 24-hour period alone ending during the morning of 21 July 2021, a remarkable 612.9 millimeters (24.13 inches) of rain fell. This compared to total annual average rainfall of 640.8 millimeters (25.23 inches). Between 4 and 5 PM local time on 20 July 2021, Zhengzhou registered 201.9 millimeters (7.95 inches) of rain. The graphic below highlights hourly rainfall from July 19 to July 21. The flooding led to more than 552,000 filed insurance claims, with the local Henan insurance industry citing total losses of $1.9 billion. This marked the costliest weather event ever recorded for Chinese insurers. The overall economic cost in Henan was listed at ¥120 billion ($19 billion), with a sizeable portion occurring in Zhengzhou. Data: CMA, NASA / GPM. Graphic: Aon (Catastrophe Insight)

The report reveals a total of $343 billion in economic losses in 2021, $329 billion of which resulted from weather and climate-related events, making last year the third costliest year on record after adjusting for inflation. While losses were up from 2020, the number of notable disaster events slightly decreased, demonstrating the heightened costliness and severity of these events. Of the 2021 losses, only 38 percent were covered by insurance. Despite an increase in overall losses from 2020, the protection gap of economic losses not covered by insurance decreased from 63 percent to 62 percent in 2021.

In the past decade alone, weather disasters resulted in nearly $3 trillion in economic damage. Whether it’s tropical cyclones, flooding, or wildfire, they all have one element in common: they put lives, livelihoods and property at risk. The increasing impact of climate change has woken up the world to the importance of tackling its effects. The 2021 Weather, Climate and Catastrophe Insight report investigates how best to build for the long-term while tackling the immediate challenges of a volatile world. Download the report today: https://aon.io/aon-wcc21. Video: Aon

“Clearly there is both a protection and innovation gap when it comes to climate risk,” said Eric Andersen, president of Aon. “As catastrophic events increase in severity, the way that we assess and ultimately prepare for these risks cannot depend on solely historical data. We need to look to technology like artificial intelligence and predictive models that are constantly learning and evolving to map the volatility of a changing climate. With scalable solutions, we can help organizations make better decisions that make them more resilient as they continue to more frequently face interconnected and increasingly volatile risks.”

Western U.S. fire season climatology, 1991-2020, compared to the 20th Century average. Prior to 2015, the globe recorded just four years in which aggregated wildfire-related insured losses had topped $2 billion (2021 USD). The year 2021 marked the seventh consecutive year that insured wildfire losses surpassed that threshold. There have been 21 individual billion-dollar insured fires globally. Sixteen have occurred since 2015, and all but two of those events were in the United States. During the peak industry loss years of 2017 ($18 billion), 2018 ($17 billion), and 2020 ($14 billion), the billion-dollar damage costs from these fires prompted important conversations on the rising costs of the peril. However, prior to 2015, the thought of a $500 million or $1 billion industry loss from a wildfire – or at least 1,000 properties destroyed – would generate significant attention. As larger and more destructive fires have become more commonplace within the past five years, there has become a general acceptance of fire events surpassing $1 billion. In similarity with the severe convective storm peril, individual wildfires now seem to require a multi-billion-dollar damage bill to truly earn the full interest of the market. This acceptance of a “new normal” highlights the rapid shift in how the peril is viewed. In 2021, the most notable fires were found in the U.S., where the Dixie and Caldor fires in California combined to top $2 billion in insured losses. The Marshall Fire ignited in late December near Boulder, Colorado and became the state’s most destructive fire on record. The fire resulted in $2 billion in insured losses and became the first fire event to reach that threshold in the United States outside of California. Data: NOAA. Graphic: Aon
Western U.S. fire season climatology, 1991-2020, compared to the 20th Century average. Prior to 2015, the globe recorded just four years in which aggregated wildfire-related insured losses had topped $2 billion (2021 USD). The year 2021 marked the seventh consecutive year that insured wildfire losses surpassed that threshold. There have been 21 individual billion-dollar insured fires globally. Sixteen have occurred since 2015, and all but two of those events were in the United States. During the peak industry loss years of 2017 ($18 billion), 2018 ($17 billion), and 2020 ($14 billion), the billion-dollar damage costs from these fires prompted important conversations on the rising costs of the peril. However, prior to 2015, the thought of a $500 million or $1 billion industry loss from a wildfire – or at least 1,000 properties destroyed – would generate significant attention. As larger and more destructive fires have become more commonplace within the past five years, there has become a general acceptance of fire events surpassing $1 billion. In similarity with the severe convective storm peril, individual wildfires now seem to require a multi-billion-dollar damage bill to truly earn the full interest of the market. This acceptance of a “new normal” highlights the rapid shift in how the peril is viewed. In 2021, the most notable fires were found in the U.S., where the Dixie and Caldor fires in California combined to top $2 billion in insured losses. The Marshall Fire ignited in late December near Boulder, Colorado and became the state’s most destructive fire on record. The fire resulted in $2 billion in insured losses and became the first fire event to reach that threshold in the United States outside of California. Data: NOAA. Graphic: Aon

Other key findings from the report include:

  • 401 notable disaster events were recorded in 2021, down from 416 in 2020.
  • There were 50 instances of billion-dollar economic loss events, the fourth highest year on record, with only 20 of the events reaching the billion-dollar insured threshold.
  • European floods in July were the costliest disaster on record for the continent at $46 billion.
  • Wildfires increased in prominence as conditions have become more conducive for rapid fire spread, with the term “fire season” becoming officially outdated as the risk of dangerous wildfires is prevalent during the full calendar year.
  • Germany, Belgium, Austria, Luxembourg, and China recorded the costliest insurance industry events on record.
  • 2021 was the world’s sixth-warmest year on record with land and ocean temperatures at 0.84°C (1.51°F) above the 20th-century average.
  • The hottest temperature ever reliably measured on Earth was unofficially recorded in Death Valley, California, United States on 9 July 2021 at 54.4°C (130.0°F).

“Many global communities are exposed to increasingly volatile weather conditions that are in part enhanced by the growing effects of climate change. This includes record-setting episodes of extreme temperatures, rainfall and flooding, droughts and wildfires, rapidly intensifying tropical cyclones and late season severe convective storms,” said Steve Bowen, meteorologist and head of Catastrophe Insight at Aon. “We can no longer build or plan to meet the climate of yesterday. With physical damage loss costs rising, this is also leading to lingering global disruptions to supply chains and various humanitarian and other asset-related services. The path forward for organizations and governments must include sustainability and mitigation efforts to navigate and minimize risk as new forms of disaster-related volatility emerge.”

The top 10 global economic loss events in 2021 were as follows:

Direct economic losses and physical damage resulting from natural disasters were estimated at $343 billion in 2021. This marked the seventh-costliest year on record after adjusting actual incurred damage to today’s dollars using the U.S. Consumer Price Index. While not a record-breaking year – far below the peak loss years seen in 2011 ($615 billion) and 2017 ($532 billion) – it was above the average ($271 billion) and median ($265 billion) of the 21st Century. When compared to the last decade (2011-2020), the economic losses were four percent higher than average and 15 percent higher than the median. The economic cost solely resulting from weather and climate-related events, which is defined as events caused by atmospheric-driven phenomena, totaled $329 billion. This was the third-highest loss on record after adjusting for inflation, only behind 2017 and 2005. The total was 45 percent higher than the 21st Century average and 52 percent higher than the median. The most notable takeaway from the economic costs of natural disasters in 2021 was the frequency of large-scale and highly impactful events. Four individual events topped the $20 billion economic loss threshold: Hurricane Ida, July Flooding in Europe (Bernd), Summer Seasonal Flooding in China and the February Polar Vortex in North America (U.S./Mexico). This was just the second time on record in which four $20+ billion events had been registered in a calendar year, but the first time that four events were weather/climate related. Graphic: Aon
Direct economic losses and physical damage resulting from natural disasters were estimated at $343 billion in 2021. This marked the seventh-costliest year on record after adjusting actual incurred damage to today’s dollars using the U.S. Consumer Price Index. While not a record-breaking year – far below the peak loss years seen in 2011 ($615 billion) and 2017 ($532 billion) – it was above the average ($271 billion) and median ($265 billion) of the 21st Century. When compared to the last decade (2011-2020), the economic losses were four percent higher than average and 15 percent higher than the median. The economic cost solely resulting from weather and climate-related events, which is defined as events caused by atmospheric-driven phenomena, totaled $329 billion. This was the third-highest loss on record after adjusting for inflation, only behind 2017 and 2005. The total was 45 percent higher than the 21st Century average and 52 percent higher than the median. The most notable takeaway from the economic costs of natural disasters in 2021 was the frequency of large-scale and highly impactful events. Four individual events topped the $20 billion economic loss threshold: Hurricane Ida, July Flooding in Europe (Bernd), Summer Seasonal Flooding in China and the February Polar Vortex in North America (U.S./Mexico). This was just the second time on record in which four $20+ billion events had been registered in a calendar year, but the first time that four events were weather/climate related. Graphic: Aon

The full report and a short video are available on Aon’s interactive microsite. Along with this report, readers can access current and historical natural catastrophe data and event analysis at catastropheinsight.aon.com.

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Aon: $343 Billion In Global Weather-, Catastrophe-Related Economic Losses Reported In 2021, Up From $297 Billion In 2020