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Natural disaster risks

Rising trend in losses

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    Each year, natural disasters around the world destroy assets worth hundreds of billions of dollars. In many cases, only a small portion of the loss is insured. While the insurance gap in industrialised countries has narrowed in recent years, it remains unchanged in developing and emerging countries that are particularly susceptible to disasters: following many loss events from storms, floods, landslides and other disasters, people and businesses affected are left to bear virtually the full brunt of the losses themselves. They frequently rely on subsidies and donations from their own country or from abroad.
    US$ 270bn
    Losses from natural disasters in 2022
    Roughly 55% was not insured

    For insurers, it is essential to have in-depth knowledge of risks and how they are developing in order to be able to assess extreme risks and develop new insurance solutions. The majority of research findings indicate that weather-related natural disasters are already being influenced by climate change, and that this influence is likely to become even stronger in the future. Short- and medium-term natural climate oscillations also significantly influence the risk situation.  

    In order to be able to assess the trends and risks emanating from natural hazards, it is therefore essential to investigate the scientific background, analyse large quantities of data (data analytics) and develop high-resolution risk models.

    Five decades of research into natural disasters

    When the rising trend in both overall and insured natural disaster losses first emerged in the 1970s, Munich Re was quick to identify the greater need for expertise in this field. Since then, its experienced scientists and insurance experts have been analysing and assessing the full spectrum of natural hazards, ranging from cyclones, severe thunderstorms and floods to earthquakes and volcanic eruptions. 

    Risk analyses reflecting the current state of scientific knowledge form the basis for risk models, the range of natural hazard covers for our clients and the development of innovative insurance solutions.

    Chair of the Reinsurance Committee
    Climate change is taking an increasing toll. The natural disaster figures for 2022 are dominated by events that, according to the latest research findings, are more intense or are occurring more frequently. Prevention and financial protection, for example in the form of insurance, must therefore be given higher priority.
    Thomas Blunck
    Munich Re
    Chair of the Reinsurance Committee

    Bulk of natural disaster losses remains uninsured

    Earthquakes, storms, floods and droughts: only roughly a quarter of natural disaster losses were insured at the start of the 1980s – even in highly developed industrialised countries. Today the average figure is still no more than half. In emerging and developing countries on the other hand, the situation has remained unchanged for decades: the insured portion is still well under 10%, and in many cases it is virtually zero. And yet the broader use of insurance, especially in developing countries, could help people cope better with financial losses following natural disasters and help them resume their daily lives as quickly as possible. Munich Re is making important contributions in this area and developing innovative insurance solutions – some of them in collaboration with NGOs, partners in the public sector, and supranational organisations. Insurers help to avoid losses by accurately assessing the risks. 

    The challenge: from the science to insurance

    Munich Re identifies and analyses changing or emerging risks from natural hazards, including changes resulting from climate change and natural climate variability. The aim is to thoroughly assess the loss potential from natural hazards and to promptly harness findings on changes for the purposes of our own risk management and for the benefit of our clients.
    Contact our experts
    Ernst Rauch Portrait
    Ernst Rauch
    Chief Geo & Climate Scientist
    Climate Change Solutions Department
    Alexander Allmann
    Geophysicist and earthquake expert