According to a new
Maryam Golnaraghi, lead author of the report and Geneva Association director of climate change and environment, shared further insights into the findings in a media roundtable webinar, "
"We indeed live in quite challenging times. We started the year with devastating disasters from Greater Los Angeles, wildfires and tornadoes across the U.S., to unprecedented wildfires in South Korea. In fact, economic and insured losses from extreme weather have risen steadily over the last 30 years," said Golnaraghi. "But since 2020, annual insured losses have consistently exceeded 100 billion U.S. dollars and are projected to surpass 200 billion in 2025."
Golnaraghi continued, "Now, while historically insured losses were driven primarily by large events like U.S. hurricanes, typhoons in Japan and European winter storms, since 2000, 55% of losses have been attributed to more frequent and localized events like floods, wildfires, hail and tornadoes, highlighting that these disasters can happen anywhere."
According to the findings, insured losses from extreme weather events accounted for nearly one-third of total economic losses on average, and some of the greatest drivers of home insurance affordability issues include land-zoning that results in higher concentrations of people or structures in hazard-prone areas, outdated building codes, ageing infrastructure and rising costs to rebuild as a result of inflation.
"The impact of these rising exposures and vulnerabilities on insurance is generally an afterthought, or not considered at all. Yet insurers are first in line to help society cope with the financial impact of extreme weather events, " said Golnaraghi. "However, years of recurrent high insurance losses are straining the sector."
The report highlights two main areas of action for homeowners, lenders, governments, regulators, insurers and reinsurers: scaling proven, incentives-based local resilience strategies and implementing structural reforms, such as mortgage systems, and incorporating resilience in credit ratings.
"Insurers cannot solve this problem alone. We took a deeper look at the complex landscape of public and private stakeholders whose actions directly or indirectly impact the risk profile of properties over their lifetime. We determined that many can play a huge role…" Golnaraghi stated. "In a world that has not yet made adequate progress to reduce greenhouse gas emissions, we need to double down on adaptation and building local resilience. This is more important than ever to address not only the short-term challenges that we are observing, but also leading to long term benefits for homeowners, businesses and governments."
