Natural disasters caused $190 billion in global economic losses in 2020 and $81 billion in insured losses, according to Swiss Re. These losses could actually have been much higher. While the North Atlantic hurricane season saw a record 30 named storms with combined insured losses of $21 billion, they largely hit areas with low population density and insurance exposure. In addition, 71% of insured disaster losses were actually caused by “secondary perils,” defined as relatively frequent natural catastrophes like severe convective storms (thunderstorms, hail and tornadoes), wildfires, droughts and flash floods that typically generate low to medium losses.
However, population growth, increasing property values in exposed regions and climate change effects have exacerbated disaster risks, and Swiss Re believes future peak-loss scenarios could grow as result. For example, a peak-loss inducing hurricane season combined with multiple secondary perils could result in annual insured losses of $250 billion to $300 billion.