Natural catastrophes caused an estimated $112 bn in global economic losses during the first half of the year. Only $44 bn was insured, leaving a protection gap of about 60%, according to Munich Re.
Although losses were below the five-year average ($136 bn economic losses and $66 bn insured losses), they remain well above historical norms and continue to highlight the growing cost of climate-related risks.
Several trends stand out
- A double earthquake in Venezuela became the costliest disaster of H1, causing an estimated $30 bn in economic losses. Insured losses were less than $1 bn, illustrating one of the world’s largest protection gaps.
- Severe convective storms in the U.S. generated about $30 bn in economic losses, including $22 bn insured. Once again, thunderstorms were the largest source of insured losses for the insurance industry.
- Europe and North America experienced record-breaking heatwaves, with temperatures exceeding previous records by wide margins. Europe continues to warm more than twice as fast as the global average.
The financial impact of heat extends far beyond insured property damage.
Every additional 10 days with temperatures above 35°C reduces annual labor productivity by an average of 0.3% across developed economies – roughly equivalent to the economic impact of a 5% increase in energy prices.
Heat-related business interruption, infrastructure failures, transport disruptions and agricultural losses are becoming increasingly important economic risks, even though many remain difficult to insure.
The gap between economic and insured losses continues to widen, making resilience, adaptation and insurance coverage more important than ever.
