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Risks posed by natural disasters

Losses are trending upwards

Each year across the world, natural disasters destroy assets running into multiple billions. Often, only a tiny proportion of this damage is insured. While the insurance gap has diminished in recent years in industrialised countries, there is still a considerable gulf in developing and emerging countries. It is often the case there that individuals and companies affected by a catastrophe have to carry on regardless and are forced to rely on donations from their own country or abroad.

US$ 280bn
Total losses as a result of natural disasters in 2021
Almost 60% of this total was not insured

Insurers seeking to assess extreme natural catastrophe risks and develop new insurance solutions must have in-depth knowledge of the risks involved and of the factors that affect those risks.

As such, research into the scientific correlations and analysis of the relevant high-level data are essential elements when assessing the trends and risks associated with natural hazards.

Nearly five decades of research into natural disasters

When it became apparent back in the 1970s that overall and insured losses from natural disasters were increasing, Munich Re was quick to identify that greater expertise was required in this area. Since then, experienced scientists and insurance specialists have been analysing and assessing the entire spectrum of natural hazards, including cyclones, severe thunderstorms, floods, earthquakes and volcanic eruptions.

Working in close collaboration with our risk management specialists and a global network of experts and research institutions, we at Munich Re ensure that our risk analyses always reflect the latest scientific findings. These analyses form the basis of our risk models and the range of natural hazard products that we offer to our customers, and allow us to develop innovative insurance solutions.

More widespread insurance coverage helps people, companies and entire economies get back on their feet more quickly when a catastrophe event happens.
Joachim Wenning
Munich Re

High share of natural catastrophe losses remains uninsured

Earthquakes, storms, floods and droughts — back in the early 1980s, only around a quarter of losses resulting from natural disasters were insured, even in highly developed industrialised countries. Even today, less than half of all losses are covered. However, the situation in developing and emerging countries has not improved at all in decades: the proportion of insured losses is still well below 10% and often enough almost zero. More widespread insurance coverage could therefore help to put emerging countries in particular in a better position to withstand the economic shock that follows natural disasters. In addition to making significant contributions to research in this area, Munich Re is also developing innovative insurance solutions — both independently and in collaboration with non-governmental organisations (NGOs), partners in the public sector and supranational organisations. We also apply our expertise to developing preventive measures and contributing to empowerment projects.

Weather catastrophes dominated both overall ...

... and insured losses from natural catastrophes in 2021

The challenge: Turning science into underwriting

Munich Re identifies and analyses risks and changing or emerging hazards from natural events which are triggered by natural and man-made climate variability. It also investigates hazards that are not yet sufficiently mapped in current risk models. Our aim is to accurately assess the loss potential of natural hazards and to harness information about changes at an early stage, with a view to benefiting both our in-house risk management team and our clients.
Contact our experts
Ernst Rauch Portrait
Ernst Rauch
Chief Geo & Climate Scientist
Climate Change Solutions Department
Alexander Allmann
Geophysicist and earthquake expert