Global disasters exacerbated by climate change produced $210 billion of losses in 2020 as several countries, including the U.S. and China, battled hurricanes, floods, and wildfires, according to a report by reinsurance company Munich Re.
The worldwide monetary losses in 2020 were up 26.5% compared to 2019’s cost of $166 billion, Munich Re stated. $82 billion worth of damage was insured last year, up from $57 billion in 2019. Last year’s natural disasters claimed approximately 8,200 lives.
“Natural catastrophe losses in 2020 were significantly higher than in the previous year,” said Torsten Jeworrek, a member of Munich Re’s board of management. “Record numbers for many relevant hazards are a cause for concern.”
Reinsurers, which provide financial protection to insurance companies, saw their share prices drop over the course of 2020. Shares of Munich Re, Berkshire Hathaway, Swiss Re, and AIG dropped 1.5%, 2.7%, 14.3%, and 21%, respectively, over the past 12 months.
U.S. Faces Year of Record Damage
Natural disasters in the U.S. accounted for $95 billion of overall losses in 2020, compared to $51 billion in 2019. Of the 10 costliest global natural disasters last year, six occurred within the U.S. Hurricane Laura, which hit Louisiana in August, was the most destructive event in the country, costing $13 billion, of which $10 billion was insured.
The hurricane season in the North Atlantic was hyperactive, with 13 out of 30 storms reaching hurricane status. Overall losses from the hurricane season in North America came to $43 billion, of which $26 billion was insured. Meanwhile, severe thunderstorms in the Midwest cost $40 billion in overall losses, up 33% compared to 2019’s $30 billion.
Total losses from the wildfires in California, Colorado, and Oregon amounted to approximately $16 billion, of which $11 billion was insured, as the world witnessed one of the hottest periods in over 100 years.
Developing Countries’ Struggle to Insure
One of the problems the report highlighted was the lack of insurance coverage for disasters in developing countries. Floods in China were responsible for the highest individual loss of $17 billion, but only around 2% of that was insured. Overall losses in Asia were $67 billion, and while the damage cost 13% less than in 2019, only $3 billion in 2020 was insured.
Europe’s Losses Were Benign
Europe’s natural disaster figures were relatively benign, with $12 billion of overall losses and $3.6 billion of insured losses. Localized extreme losses were triggered by heavy rainfall along the Mediterranean coasts of France and Italy, while Croatia suffered its strongest earthquake in 140 years in December.