Natural disasters caused $365b in damage last year

ZURICH • Flooding caused US$82 billion (S$111.04 billion) in damage worldwide in 2021, Swiss reinsurance giant Swiss Re announced yesterday, warning that the amount of uninsured losses was only likely to grow with climate change.

Floods were only one among a range of natural catastrophes to hit last year, said Swiss Re. In total, natural disasters, including storms, earthquakes, forest fires and tsunamis, caused US$270 billion (S$365 billion) in damage in 2021, with US$111 billion of that covered by insurers, it said.

Still, that US$111 billion equalled the fourth-largest payout since the Swiss Re Institute, the insurer's research arm, began keeping records in 1970.

The Zurich-based group, which acts as an insurer for insurers, said last year's floods in Germany and its neighbours generated economic losses of more than US$40 billion - only US$13 billion of which were covered by insurance.

The floods were the most costly natural disaster ever recorded in Europe, Swiss Re said in its report on the cost of natural and man-made disasters in 2021. But due to climate change and increasing urbanisation, Swiss Re's research institute expects economic losses from flooding to increase.

"Floods affect nearly a third of the world population, more than any other peril," Mr Martin Bertogg, head of catastrophe perils at Swiss Re, said in a statement. "In 2021 alone, we witnessed more than 50 severe flood events across the world."

However, a full 75 per cent of flood risks are still not insured, the group said. "Given the scale of devastation, flood risk deserves the same attention and risk assessment rigour as primary perils such as hurricanes," said Mr Bertogg.

Last year was marked by a range of devastating floods, notably in China, India, the Philippines, and the United States in the wake of Hurricane Ida. Ida and the freakish winter storm that froze Texas last February topped last year's list of most damaging storms, according to Swiss Re.

Of the US$82 billion of flooding damage last year, just over US$20 billion was covered by insurers, emphasising the gap in flood risk protection. The gap is the biggest in Asia, where only 7 per cent of economic losses due to floods were covered by insurance. That compares to 34 per cent in Europe, said Swiss Re.

Man-made disasters, including fires, explosions, shipping and rail disasters, mining accidents and collapsed buildings, meanwhile carried a price tag of US$10 billion, US$8 billion of which was insured. War and war-like events are not included in that number.

Swiss Re pointed out that floods are considered secondary perils, as opposed to major catastrophes like hurricanes and earthquakes. But such secondary perils, which also include tornadoes, storms, hail and drought, are occurring with growing frequency, incurring swelling costs for insurers.

In 2021, so-called secondary peril events accounted for more than 70 per cent of all insured losses.

AGENCE FRANCE-PRESSE, BLOOMBERG