Climate change drives $270 billion 2022 losses

Climate change is tending to increase weather extremes, according to Munich Re, whose latest analysis suggests overall losses of around $270 billion from natural catastrophes in 2022.

Insured losses were some $120 billion – on a par with 2021. As such, 2022 joins the recent run of years with high losses, with overall losses close to the average for the last five years, while insured losses were significantly above average (2017–2021: $97 billion).

“Two factors should be kept in mind when considering the 2022 natural disaster figures,” says Ernst Rauch, chief climate scientist at Munich Re. “Firstly, we are experiencing La Niña conditions for the third year in a row. This increases the likelihood of hurricanes in North America, floods in Australia, drought and heatwaves in China, and heavier monsoon rains in parts of South Asia. At the same time, climate change is tending to increase weather extremes, with the result that the effects sometimes complement each other.”

Costliest natural disasters in 2022 

According to Munich Re, Hurricane Ian was responsible for more than one third of overall losses and for roughly half of insured losses worldwide. This powerful tropical cyclone made landfall on the west coast of Florida in September with wind speeds of almost 250 km/h (150 mph). Only four other storms on record have been stronger when making landfall on the US mainland, while some others were of a similar strength to Ian. According to provisional estimates, it caused overall losses of around $100 billion, of which $60 billion was insured (not including the National Flood Insurance Program for private homeowners). In terms of insured losses adjusted for inflation, Ian was the second-costliest tropical cyclone on record after Hurricane Katrina in 2005. 

The (re)insurer adds that severe storms like Ian fit in with the anticipated consequences of climate change: most researchers do not expect an increase in the overall number of tropical cyclones as a result of global warming. However, they do anticipate a rise in the proportion of particularly severe cyclones with exceptionally heavy rainfall. 

Pakistan floods

The year’s second-costliest and greatest humanitarian disaster was severe flooding in Pakistan resulting from record-breaking monsoon rainfall. In the month of August, rainfall there was between five and seven times heavier than usual. Accelerated glacier melt as a result of the high temperatures significantly increased the flooding. At least 1,700 people were killed. 

Direct losses are estimated to be at least $15 billion – which Munich Re says was an enormous amount given the size of the country’s GDP. Almost nothing was insured and countless people lost all their belongings. Researchers estimate that the intensity of an event of this kind has already increased by half because of climate change, compared to a world without global warming, and that it will continue to rise in the future. 

Australia floods

For insurers, the second-costliest single natural disaster in 2022 was flooding in the southeast of Australia in February and March, according to Munich Re. In the states of Queensland and New South Wales, extreme rainfall led to countless flash floods and severe river flooding. Numerous residents had to be rescued from their homes by boat or helicopter. The floods also affected the major population centres of Brisbane and Sydney. Of the overall losses of approximately $6.6 billion just under $4 billion was insured. 

In October, torrential rainfall again resulted in disastrous flooding in the southeast of the country. However, losses were not as severe as those at the start of the year, Munich Re suggests. Overall, it adds, floods in Australia caused losses of $8.1 billion last year, of which $4.7 billion was insured. 

Wildfire risk

In North America, the wildfire season in 2022, particularly in California, passed without any events that caused extensive property damage, despite the predominantly dry conditions, according to the (re)insurer. In California, the authorities reported wildfires over an area of some 1,400 km2 (350,000 acres), well below the long-term average of almost 2 million acres. Multiple rain events considerably reduced the wildfire risk and made it easier for the fire services to put out any fires that did occur. 

China drought

In China, a protracted heatwave and drought, with temperatures of over 44°C in many parts of the country, led to water shortages and crop failures. The water level in the Yangtze, the longest and economically most important river in the country, receded significantly, as did the levels in many other rivers and reservoirs. In some areas, shipping was suspended and the electricity yield from key hydroelectric stations fell drastically. Several large industrial corporations had to temporarily suspend production. According to rough estimates, the damage, including losses from crop failures, could be in the mid-single-digit billions, virtually none of which will have been insured. 

Natural cycles

Munich Re says that natural cycles play an important role in Australian flood risk, as torrential rainfall is much more likely during La Niña years. However, researchers now believe that climate change is additionally influencing the intensity of the rainfall. The same is true for bushfires and heatwaves, which tend to occur in El Niño years, the opposite phase to La Niña. 

“Climate change is taking an increasing toll,” says Thomas Blunck, member of the Board of Management at Munich Re. “The natural disaster figures for 2022 are dominated by events that, according to the latest research findings, are more intense or are occurring more frequently. In some cases, both trends apply. Another alarming aspect we witness time and again is that natural disasters hit people in poorer countries especially hard. Prevention and financial protection, for example in the form of insurance, must therefore be given higher priority.” 

According to Munich Re, Hurricane Ian was responsible for more than one third of overall losses and for roughly half of insured losses worldwide. This powerful tropical cyclone made landfall on the west coast of Florida in September with wind speeds of almost 250 km/h (150 mph). Only four other storms on record have been stronger when making landfall on the US mainland, while some others were of a similar strength to Ian.

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