Map showing notable economic loss events due to natural and climate disasters in 2023. Global economic losses in 2023 were higher than the 21st century average. Economic losses from global natural disasters in 2023 are estimated at $380 billion, above long-term and short-term averages, after adjusting historical losses to today’s values using the U.S. Consumer Price Index. All continents recorded remarkable natural disaster events in 2023 and multiple countries faced the most significant disasters in their modern histories. The global map shows event and peril patterns that contributed to the overall economic losses in 2023. The largest loss driver was earthquake, yet this was largely caused by a handful of events, notably the earthquake sequence in Turkey and Syria. Severe convective storms came second, with the largest individual losses concentrated in the United States and Europe. Graphic: Aon
Map showing notable economic loss events due to natural and climate disasters in 2023. Global economic losses in 2023 were higher than the 21st century average. Economic losses from global natural disasters in 2023 are estimated at $380 billion, above long-term and short-term averages, after adjusting historical losses to today’s values using the U.S. Consumer Price Index. All continents recorded remarkable natural disaster events in 2023 and multiple countries faced the most significant disasters in their modern histories. The global map shows event and peril patterns that contributed to the overall economic losses in 2023. The largest loss driver was earthquake, yet this was largely caused by a handful of events, notably the earthquake sequence in Turkey and Syria. Severe convective storms came second, with the largest individual losses concentrated in the United States and Europe. Graphic: Aon

LONDON, 23 January 2024 (Aon) – Aon plc, a leading global professional services firm, today published its 2024 Climate and Catastrophe Insight report, which identifies global natural disaster and climate trends to help make better decisions to manage volatility and enhance global resilience.

The report reveals that the 398 global natural disaster events caused a $380 billion (2022: $355 billion) economic loss during the 12-month period under review – 22 percent above the 21st-century average – driven by significant earthquakes and relentless severe convective storms (SCS) in the United States and Europe.

Global insurance losses during the year were 31 percent above the 21st-century average, exceeding $100 billion for the fourth year in a row. With insurance covering only $118 billion (2022: $151 billion), or 31 percent of total losses, the ‘protection gap’ stood at 69 percent (2022: 58 percent), which highlights the urgency to expand insurance coverage.

Table showing the Top 10 global economic loss events in 2023 due to natural and climate disasters. Approximately a quarter of all economic losses in 2023 were attributed to the disastrous earthquake sequence in Turkey and Syria, which struck the region in February. Widespread impact on property and infrastructure resulted in more than $90 billion in direct damage — making it the costliest natural disaster recorded in both Turkey and Syria, the Middle East and the entire EMEA region in modern history. At least four other events have crossed the $10 billion dollar economic damage threshold, with China reporting total flood damage in excess of $30 billion again, after a below-average loss year in 2022. Powerful Hurricane Otis made its devastating landfall at Category 5 intensity near Acapulco in Mexico and made history as the strongest landfalling hurricane in Eastern Pacific. Drought was prominent in North and South America. While only three severe convective storm events ranked among the top 10 individual economic losses of 2023 and none of them surpassed $10 billion, the peril was responsible for more than $94 billion in combined damage. Graphic: Aon
Table showing the Top 10 global economic loss events in 2023 due to natural and climate disasters. Approximately a quarter of all economic losses in 2023 were attributed to the disastrous earthquake sequence in Turkey and Syria, which struck the region in February. Widespread impact on property and infrastructure resulted in more than $90 billion in direct damage — making it the costliest natural disaster recorded in both Turkey and Syria, the Middle East and the entire EMEA region in modern history. At least four other events have crossed the $10 billion dollar economic damage threshold, with China reporting total flood damage in excess of $30 billion again, after a below-average loss year in 2022. Powerful Hurricane Otis made its devastating landfall at Category 5 intensity near Acapulco in Mexico and made history as the strongest landfalling hurricane in Eastern Pacific. Drought was prominent in North and South America. While only three severe convective storm events ranked among the top 10 individual economic losses of 2023 and none of them surpassed $10 billion, the peril was responsible for more than $94 billion in combined damage. Graphic: Aon

The number of large-loss natural hazard events reached record levels in 2023, with 66 billion-dollar economic loss events, and 37 billion-dollar insured loss events. Earthquakes caused the most economic losses, while severe convective storms were most costly to insurers. New Zealand, Italy, Greece, Slovenia and Croatia all recorded their costliest weather-related insurance events on record.

The report highlights that 95,000 people globally lost their lives due to natural hazards in 2023 – the highest number since 2010 – resulting largely from earthquakes and heatwaves. In terms of climate, 2023 was the hottest year on record with ‘unprecedented temperature anomalies’, and all-time highs observed in 24 countries and territories. 

“Amidst increasing volatility and complexity, there is a significant opportunity for organizations to become more resilient to the climate and catastrophe risks highlighted in our report,” said Greg Case, CEO of Aon. “By working across the private and public sector we are accelerating innovation, protecting underserved communities and better addressing the economic impacts of extreme weather to create more sustainable outcomes for businesses and communities around the world.”

Global billion-dollar economic loss events, 2000-2023. In 2023, there were at least 66 individual billion-dollar natural disasters, which was well above the average of 43. Half of these events occurred in the United States alone. Please note that for this report, wildfires are treated as individual events. Additionally, crossregional events, such as Atlantic hurricanes, which caused billion-dollar losses in two regions, are only counted once. There is undoubtedly a sharp increase in the number of disasters that result in more than $1 billion in economic losses globally on a price-inflated basis. This trend can largely be attributed to the increase of exposed assets. The increase in the number of these medium-size events is driven by the growing frequency of costly severe convective storms. The upward trend is less apparent when focusing on a higher loss threshold. For example, there have been 52 individual events that resulted in losses above $20 billion in 2023 USD since 2000. While such occurrences remain relatively rare, there has been at least one such event every year since 2016. Natural perils responsible for the highest number of such “mega-disasters” are tropical cyclone (18 since 2000), flooding (12) and earthquake (11). Graphic: Aon
Global billion-dollar economic loss events, 2000-2023. In 2023, there were at least 66 individual billion-dollar natural disasters, which was well above the average of 43. Half of these events occurred in the United States alone. Please note that for this report, wildfires are treated as individual events. Additionally, crossregional events, such as Atlantic hurricanes, which caused billion-dollar losses in two regions, are only counted once. There is undoubtedly a sharp increase in the number of disasters that result in more than $1 billion in economic losses globally on a price-inflated basis. This trend can largely be attributed to the increase of exposed assets. The increase in the number of these medium-size events is driven by the growing frequency of costly severe convective storms. The upward trend is less apparent when focusing on a higher loss threshold. For example, there have been 52 individual events that resulted in losses above $20 billion in 2023 USD since 2000. While such occurrences remain relatively rare, there has been at least one such event every year since 2016. Natural perils responsible for the highest number of such “mega-disasters” are tropical cyclone (18 since 2000), flooding (12) and earthquake (11). Graphic: Aon

Andy Marcell, CEO of Risk Capital and CEO of Reinsurance at Aon, added: “The findings of the report highlight the need for organizations – from insurers to highly impacted sectors such as construction, agriculture and real estate – to utilize forward-looking diagnostics to help analyze climate trends and mitigate the risk, as well as protecting their own workforces. Risk managers can take advantage of increasingly sophisticated tools and leverage analytics to unlock capital and make better decisions. Equally, the insurance industry plays a critical role in improving the financial resilience of communities within their portfolios and taking the opportunity to bridge the protection gap with new and relevant products.”

With efforts to limit global warming, investors can consider climate change from three perspectives: protecting their portfolios against financial risks; benefiting from growth opportunities in climate solutions, and determining how to have a positive impact and play a role in a world moving to net-zero.

Cumulative global economic losses by peril, 2000-2023. Tropical cyclone and flooding remained the costliest perils of the 21st century on a cumulative basis. Despite its significant loss potential, earthquake ranked first for only a short period of time in 2011 after a series of costly events. Despite the extreme loss year in 2023, earthquake may lose its third position in the following years due to the accelerating growth of the severe convective storm peril, driven by the aforementioned increasing frequency of medium-size events. Notably, SCS overtook flooding in terms of the cumulative number of billion-dollar events in 2023. There were at least 28 such SCS events in 2023 — 23 of which occurred in the United States and 5 took place in Europe. Graphic: Aon
Cumulative global economic losses by peril, 2000-2023. Tropical cyclone and flooding remained the costliest perils of the 21st century on a cumulative basis. Despite its significant loss potential, earthquake ranked first for only a short period of time in 2011 after a series of costly events. Despite the extreme loss year in 2023, earthquake may lose its third position in the following years due to the accelerating growth of the severe convective storm peril, driven by the aforementioned increasing frequency of medium-size events. Notably, SCS overtook flooding in terms of the cumulative number of billion-dollar events in 2023. There were at least 28 such SCS events in 2023 — 23 of which occurred in the United States and 5 took place in Europe. Graphic: Aon

“The report highlights how communities can be vulnerable to disasters in different ways. For example, earthquakes in 2023 highlighted underinsurance and the importance of regulation and enforcement of building codes,” said Michal Lörinc, head of Catastrophe Insight at Aon. “In addition, deadly floods – notably in Libya and India – reinforce the necessity for proper maintenance of infrastructure while the Hawaii fires demonstrated the critical need for reliable warning systems and forecasting.”

Aon’s 2024 Climate and Catastrophe Insight report can be found at the following link: https://aon.io/2024-cci-report

Number of Billion-Dollar Disasters in 2023 Highest on Record: Aon Report