’Severe weather and climate-related risks now pose an existential threat to the way we live and work,’ says broker’s global chief executive

The cost of global natural disasters to the world’s insurance industry reached £92.9bn ($118bn) in 2023 – 31% over the average for the 21st century.

That was according to Aon’s 2024 Climate and Catastrophe Insight report, which was published yesterday (25 January 2024). 

The figure represents the fourth consecutive year that insurance losses have exceeded the century’s average, reflecting the increased cost of natural disasters.

Total economic losses across the globe also reached £299bn ($380bn), which was 22% above the 21st century average and the eighth year in a row losses have surpassed £236bn ($300bn) . 

Much of this was driven by significant earthquakes and “relentless severe convective storm activity in the United States and Europe”, with the single most catastrophic event the earthquake that hit Turkey and Syria in February 2023 – which caused £72bn ($92bn) of the £299bn ($380bn) by itself. 

Aon noted that severe convective storms were the most damaging peril for insurers, which follows recent stats from UK property broker Lansdown Insurance Brokers that noted storm damage claims were the second most common claim type across 2023. 

2023 was also the hottest year on record, according to Aon, with “many significant events highlighting the neeed for better disaster preparedness and planning to reduce risk, protect lives and promote resilience”. 

Climate risk heating up

Commenting on the results of the report, Aon global chief executive Greg Case said: ”Climate risk is a certainty, not a probability.

“Throughout 2023, wildfires across Europe and North America, flooding in Asia and record-breaking heatwaves in the US and Latin America demonstrated that severe weather and climate-related risks now pose an existential threat to the way we live and work.”

Case added that, out 66 natural catastrophes that caused $1bn or more in damages in 2023, 63 of them were caused by weather. Despite this, only 40% of weather and climate-related losses were covered by insurance in 2023.

He finished: ”While many organisations have seen the threat, they have yet to take any action.

”Climate underpins many of the risks identified by the nearly 3,000 risk managers, c-suite leaders and other executives who participated in our 2023 Global Risk Management Survey.

”Still, these leaders only rank climate as a top 10 risk when they looked into the future. Rather than waiting for a disaster to strike, leaders can prepare their organisations to address climate risk to increase the resiliency of their operations, workforces and the communities they impact.”

  • Insurance Times has converted dollar amounts into pounds using an exchange rate of $1.27 = £1, which was correct as of 1 January 2024.