Global natural disaster losses in the first half of 2024 reached $120 bn, down from 2023, which saw $140 bn in losses due to a severe earthquake in Turkey and Syria.
However, 2024’s losses still surpassed the 10 and 30-year averages, according to Munich Re.
Insured losses slightly increased year-on-year to $60 bn, significantly above the adjusted ten- and thirty-year averages of $37 bn and $24 bn, respectively.
Notably, 68% of total losses and 76% of insured losses stemmed from “non-peak perils” like thunderstorms, floods, and forest fires.
Thomas Blunck, a member of Munich Re’s Board of Management, noted that weather-related disasters, particularly in North America, dominated the first half of 2024. He highlighted unusual flooding in regions like Dubai and pointed to climate change as a likely factor in these evolving risks.
Allianz emphasized the need for society, the economy, and the insurance sector to adapt to mitigate increasing losses from such events.
Ernst Rauch, Chief Climate Scientist at Munich Re, emphasized the significance of these changing weather patterns, stating, “The recent record temperatures are increasingly difficult to explain without accounting for climate change. A one-degree warmer atmosphere can hold 7% more moisture, fueling extreme weather and heavy precipitation. Munich Re’s extensive experience in covering natural disaster-related risks is backed by decades of expertise, which began 50 years ago when we first hired a meteorologist.”
Natural disasters loss forcasts
According to WTW’s Major Natural Disasters Review, more than ever, it’s critical to price the cost of natural catastrophe risks accurately and prepare accordingly. But all too often, the naive use of risk models leads people to miscalculate exposure to extreme catastrophic events.
Just three years ago, severe floods devastated several European countries, causing $54 bn in economic damages and leading to at least 243 deaths.
For many businesses, the floods far exceeded their risk scenario planning considerations, with financial impacts much worse than expected.
After any major disaster, it’s common for people to complain that their models underestimated the true costs. But it’s worth remembering we put models to work on a very difficult task: to predict the physical and financial impacts of natural hazards on a world constantly being reshaped by climate change, exposure growth and inflation.
According to Aon’s Global Natural Catastrophe Statistics, 1H 2024 saw multiple notable natural catastrophe events, which drove total year-to-date economic losses above at least $117 bn. This was lower than the 21st-century 1H average of $137 bn andsignificantly lower than losses in the first half of 2023 ($226 bn).
By early July, the second named storm of the season, Hurricane Beryl, already resulted in potentially multi-billion-dollar losses.
The rising threat of natural disasters, climate change, socioeconomics, and other related risks continues to drive the need for better research and forecasting. A recent Gallagher survey of 1,000 business owners found that 91% identified specific weather or natural hazards as risks to their business. 85% were at least somewhat concerned about the impact of climate change or natural disasters on their business in the next 12 months.
The insurance protection gap is estimated at 50%, one of the lowest on record for the first half of the year.
This is due to the higher contribution of SCS insured losses. Fatalities are estimated at over 6,000, the lowest since 2020 and below long-term averages.
Costliest Natural Disasters
The most expensive disaster in early 2024 was a New Year’s Day earthquake in Japan. The 7.5-magnitude quake struck the western coast near the Noto Peninsula, causing widespread damage, according to Munich Re.
Over 200 people died, and many lost access to power and clean water for weeks. The total losses reached approximately $10 bn, with insured losses around $2 bn.
Japan’s preparedness for natural disasters, through earthquake-resistant construction, early-warning systems, and effective emergency response strategies, significantly reduces potential fatalities during such events.
Despite frequent seismic activity, Japan’s strict building codes, continuously updated after major seismic events, reduce earthquake casualties. These codes, established after the 1923 Yokohama earthquake, mandate stringent seismic design and retrofitting.
The 1995 Kobe and 2011 Tohoku earthquakes prompted further improvements, enhancing seismic resilience. In response to the 1995 Kobe earthquake, Japan implemented an early warning system and conducts regular earthquake drills to improve public preparedness and response.
Severe Thunderstorm Season in the US
In the United States, severe thunderstorms were the main contributors to losses in the first half of 2024. The National Oceanic and Atmospheric Administration (NOAA) reported 1,250 tornadoes from January to June, well above the long-term average of 820.
As of mid-year, 2024 ranks as the fourth-costliest year for severe thunderstorm losses in the U.S., with total losses at $45 bn, including $34 bn in insured losses.
In 2023, comparable figures were $52 bn in total losses and $40 bn in insured losses.
This year’s most severe storms have involved tornado “outbreaks,” where multiple tornadoes originate from the same large-scale weather pattern over one or more days. From April 26 to 28, severe weather in the Southern and High Plains generated over 140 tornadoes, including a violent EF4 tornado that destroyed a Dollar Tree distribution warehouse in Marietta, Oklahoma.
Severe convective storm (SCS) losses in the US continued to dominate global insured losses in H1, following a highly active period for the peril in late April and May.
US SCS accounted for 61% of global insured losses during the first six months of 2024, according to Gallagher Re’s report about Natural Catastrophe and Climate.
Even more remarkable, when combining insured US SCS losses during the past 18 months (FY 2023 and H1 2024), we have officially topped $100 bn. This is a staggering sum and the costliest two-year stretch ever recorded for the peril.
Climate change and natural disasters
According to WTW, natural disasters amplified by climate change continue to take a bitter toll on the global economy and caused more than $350 bn in economic losses, with insurance covering just over $100 bn.
Catastrophic events in 2024 already include severe convective storms in the U.S., major earthquakes striking Japan and Taiwan, exceptionally intense rainstorms in the Middle East, the largest wildfire ever in Texas’ northern Panhandle and severe flooding in southern Germany.
Global Temperatures and Heavy Rainfall
From January to June, the global average temperature was approximately 1.5°C above preindustrial levels. While a single year’s temperature increase doesn’t equate to failing Paris climate goals, the upward trend continues.
Temperatures reached unprecedented highs globally, with parts of Saudi Arabia exceeding 50°C in mid-June and New Delhi recording a high of 49.9°C in May. NOAA predicts a 60% chance that 2024 could be the warmest year on record.
Heatwaves and droughts increase heatstroke fatalities and heighten the risk of forest fires. In Texas, the worst forest fire in its history burned over 400,000 hectares. Similarly, western Canada faced early-season fires in May, leading to mass evacuations. These fires caused no extreme losses due to their locations away from densely populated areas.
In May, Germany experienced severe storms and flooding, with up to 135 mm of rain falling in some areas over several days. The saturated soil, already wet from previous months, couldn’t absorb the water, leading to rivers overflowing and torrents forming.
Southern Germany’s flooding caused $5 bn in total losses, including $2.2 bn in insured losses.
This flooding resulted from a Vb-track cyclone, or “Genoa low,” where warm, moist air from the northwestern Mediterranean is pushed northward past the Alps, causing intense rain, particularly in Central Europe. Researchers predict that such weather patterns will bring more precipitation as climate change advances.
La Niña Could Intensify Hurricane Activity
The North Atlantic is likely to face a severe hurricane season in 2024. Climate change plays a significant role in driving high water temperatures, which provide the energy needed for hurricane formation.
The ENSO (El Niño/Southern Oscillation) cycle impacts hurricane probabilities. While 2023 experienced El Niño conditions that typically reduce hurricane activity, it still saw 20 named storms, making it the fourth most active season on record.
This year, however, the mitigating effects of El Niño are absent. Coupled with record-breaking sea surface temperatures, which are 0.5°C to 1.0°C above the 30-year average, these conditions could lead to an increase in hurricane activity in the North Atlantic.
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AUTHORS: Thomas Blunck – member of Munich Re’s Board of Management, Ernst Rauch – Chief Climate Scientist at Munich Re
