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WTW stresses importance of data & risk models as 2024 insured losses reach $140bn

WTW stresses importance of data & risk models as 2024 insured losses reach $140bn

WTW’s Natural Catastrophe Review estimates the global insurance protection gap for natural catastrophes at 60%. Insured losses exceeded $140 bn in 2024, marking the fifth consecutive year with damages surpassing $100bn.

Several major disasters contributed to this total. Spain recorded its costliest catastrophe, the Valencia floods, with €3.7 bn in claims. Canada faced its highest-ever insured losses from natural disasters at $5.6 bn.

Hurricanes Helene and Milton struck Florida, causing a combined $45 bn in damages. The Western Pacific typhoon season was the deadliest since 2013.

Severe convective storms in the U.S. maintained their upward trend, with insured losses exceeding $50 bn for the second year in a row. Europe endured one of its worst years for flood-related damages, with Storm Boris bringing extreme rainfall and flooding to Central and Eastern Europe, leading to $2.2 bn in claims.

WTW stresses importance of data & risk models as 2024 insured losses reach $140bn

South Asia also faced severe impacts, as intense monsoon rains disrupted agriculture, energy, and manufacturing.

With total economic damages exceeding $350 bn, WTW emphasized that the protection gap remained significant, underlining a lack of resilience to climate risks.

The report also noted that 2024 was the first year on record to surpass 1.5°C above pre-industrial levels.

The rising financial toll of natural catastrophes reflects the increasing number and value of assets at risk. Climate change is playing a growing role, with human-caused warming linked to events such as hurricanes Helene and Milton, the South American drought, and Storm Boris.

WTW highlighted the need for improved risk modelling, innovative insurance solutions, and proactive adaptation to address the growing impact of climate change.

Hélène Galy, Head of WTW Research Network, noted that collaboration with scientists provides better insights into evolving risks. She cautioned against overreliance on sophisticated models, stressing that a deeper understanding of data and science is essential to identify both improvements and limitations in risk models.

Our long-standing collaboration with scientists gives us better insights into growing exposure to perils, especially perils that are changing rapidly.

Hélène Galy, Head of WTW Research Network

“It’s easy to be lured by the increased sophistication of risk models: a deeper understanding of data and science are critical to identifying real improvements and remaining limitations of risk models, to make them more useful to decision-makers,” Hélène Galy said.

Peter Carter, Head of Climate Practice at WTW, advised insurers to take a balanced approach. He warned against relying too heavily on a single modelling method, recommending a “challenger” model to test core assumptions.

He emphasized that credible data and diverse risk perspectives help businesses make informed decisions on resilience investments, insurance coverage, and risk acceptance.

“Simply having lots of data or a single modelling approach may not give the robust risk perspectives you need. Seeking expert input and a more nuanced modelling approach, where you challenge your core modelling approach (“defender”) with a different approach (“challenger”) will provide alternative perspectives. Then you will navigate an increasingly volatile natural hazard environment much more effectively.”