
Extreme weather risks: Re|store people’s lives
Extreme weather destroys assets
worth billions
Annual losses from weather disasters such as hurricanes, hailstorms or wildfires frequently run into hundreds of billions of dollars. And that is just the figure for direct losses. It does not include indirect losses following the breakdown of supply chains, or because banks experience a surge in loan defaults, or power plants have to scale back production during a heatwave. It is time to act and to mitigate the consequences, especially as climate change is increasing the extreme weather risks in many regions.
In total, weather-related natural disasters have caused losses of some US$ 4,200bn since 1980 and killed nearly a million people. Only about a third of these losses were insured. This perfectly illustrates just how important loss prevention is given the huge loss potential involved. Good risk management also requires precise knowledge of extreme weather risks and the factors that influence them, for example climate change.
Extreme weather risks: What we know from 50 years of research
Consequences of climate change

Influence of natural climate variations

While the effects of climate change are long term, natural climate variations have a direct influence on many weather extremes over shorter periods, sometimes even a matter of months. Here are some examples of this:
El Niño-Southern Oscillation (ENSO)
The natural temperature variation in the Pacific with the two countervailing versions of El Niño and La Niña changes circulation patterns in the atmosphere, thus influencing many weather extremes across the world. For example, El Niño conditions tend to bring slightly lower hurricane activity in the North Atlantic, drier weather in the northern USA and Canada, stronger precipitation in the southern USA and more droughts in southeast Asia and Australia. La Niña has the opposite effect in many cases.
Regional climate phenomena
Besides the ENSO climate swing that influences weather risks across many parts of the world, there are many other climate variations that have significant effects at a regional level. Such variations have, for instance, a strong influence on the paths taken by typhoons in the Northwest Pacific, resulting in the recent high typhoon losses in Japan. But such natural variations also play a major part in Australia in modifying heatwave, drought and bushfire conditions from one year to the other, although in the long term climate change has also massively increased the bushfire risk in Australia.
Insurance gap: Extreme weather risks
Losses from weather disasters worldwide 1980-2019
Overall losses 1980-2019: US$ 4,238bn
Insured losses 1980-2019: US$ 1,359bn
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Our offer
Profound knowledge of scientific correlations, statistical trends and relevant high-resolution data are essential elements when assessing extreme weather risks. Our experts are part of an international scientific network providing the risk analyses that form the basis for our risk models. This allows us to have the best-possible offer of weather-related and weather-disaster covers and to develop new concepts for previously uncovered risks for a whole range of different client groups.
Insurance helps people, companies and society to recover more quickly from the financial impact of a catastrophe. Benefit from our data and decades of experience in assessing extreme weather risks and the factors behind them. Munich Re can offer solutions to meet your specific requirements.
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