Representative image Photograph:( Agencies )
Insurers covered less than half of the total losses, dishing out $83 billion, making 2020 the fifth-costliest year for the industry since 1970, Swiss Re said in a statement
Natural disasters like wildfires which devastated parts of the United States and a record number of hurricanes in the Atlantic caused $76 billion in insured losses during 2020, Swiss Re said on Tuesday.
The 40 per cent increase from $54 billion in 2019 dwarfed the $7 billion in man-made losses during 2020, the reinsurance company said in its sigma estimate for the year.
Insurers covered less than half of the total losses, dishing out $83 billion, making 2020 the fifth-costliest year for the industry since 1970, Swiss Re said in a statement.
Disasters in the United States, severe thunderstorms, tornadoes, floods, and wildfires accounted for a full 70 percent of the $76 billion which went to cover losses in natural catastrophes.
In California, Oregon and Washington State, more than 800 wildfires burned close to 6 million acres, destroying thousands of structures and triggering billions in insured claims.
The North Atlantic hurricane season brought 30 named storms, causing $20 billion in insurance claims, the company said.
Five storms hit Louisiana alone, although most of the landfalls did not hit densely populated areas, reducing the total level of insured losses from the $97 billion level seen in 2017.
Swiss Re cautioned that climate change was expected to exacerbate such perils, driving more extreme weather events such as wildfires and floods.
"As with COVID-19, climate change will be a huge test of global resilience," Jerome Jean Haegeli, Swiss Re group chief economist, said in the statement.
"But while COVID-19 has an expiry date, climate change does not, and failure to 'green' the global economic recovery now will increase costs for society in future," he warned.
Swiss Re said its estimates excluded claims related to the coronavirus pandemic.
This year has been marked by an extremely active North Atlantic hurricane season with a record 30 named storms, Swiss Re said. That includes five that made landfall in the US state of Louisiana alone, another record.
Swiss Re pointed out that most of the US landfalls did not hit densely populated areas this year, meaning insured losses from the hurricanes were relatively low at $20 billion.
That is far lower than during less active hurricane seasons that featured fewer but more devastating storms in the US at least, such as the $97 billion spent by insurers in 2017 to cover losses from Harvey, Irma, and Maria, and $87 billion in 2005 on Katrina.
"Large-scale climate conditions in the North Atlantic suggest elevated hurricane activity for 2021 and likely beyond," Martin Bertogg, head of catastrophe perils at Swiss Re, said in the statement.
"This increases the probability of a catastrophic landfall. Combined with the loss impact of secondary perils accelerated by climate change, insured catastrophe losses will only rise in the future," he warned.
"As with COVID-19, climate change will be a huge test of global resilience," said Jerome Jean Haegeli, Swiss Re Group Chief Economist.
"But while COVID-19 has an expiry date, climate change does not, and failure to 'green' the global economic recovery now will increase costs for society in future."
It noted its catastrophe loss estimates excluded claims related to COVID-19, which it said would take considerably longer than normal to assess and tally.