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Extreme weather risks in Asia-Pacific
© [M] Munich Re [P1] Ippei Naoi / Getty Images [P2] Allkindza / Getty Images [P3] Tramino / Getty Images

Extreme weather risks in Asia-Pacific

Closing the insurance gap in large parts of Asia-Pacific to pivot toward a more resilient future

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    ~US$ 1,800bn
    Losses from weather catastrophes in Asia-Pacific since 1980

    Annual losses from weather disasters such as tropical cyclones, floods or wildfires frequently run into hundreds of billions of dollars. And that is just the figure for direct losses.

    In Asia-Pacific, weather-related natural disasters have caused losses of US$ 1,800bn since 1980 and killed more than 630,000 people. The insurance gap is alarming: excluding the figures for Japan and Australia, less than 6% of the overall losses were borne by insurers.

    It is time to act and to mitigate the consequences, especially as climate change is increasing the extreme weather risks in many regions. So far, climate change has not been a systemic risk, but it will be if global warming continues unabated.

    Here's what we know from 50 years of research:

    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 over a matter of months. Here are some examples of this:

    Influence of natural climate variation

    El Niño-Southern Oscillation (ENSO) and La Niña

    The natural ocean temperature variation in the Pacific with the two countervailing versions of El Niño and La Niña also changes circulation patterns in the atmosphere, thus influencing weather extremes across the world.  

    El Niño conditions tend to bring slightly higher typhoon activity in the Northwest Pacific, drier weather in Australia/Oceania and more rainfall in South India and the Southeast of China. La Niña has the opposite effect in many cases. It increases the likelihood of floods in Australia, drought and heatwaves in China, and heavier monsoon rains in parts of South Asia. For example, in 2022, a protracted heatsave and drought with temperatures of over 44°C in many parts of led to the water level in Yangtze, the longest river in the country and many other rivers and reservoirs receded significantly.

    The emissions of anthropogenic greenhouse gases since industrialisation began are the main cause of rising temperatures in our planet’s atmosphere and oceans. Sea ice and glaciers are melting. Sea levels are rising. Higher temperatures – and the correspondingly higher energy content in the atmosphere – change the probabilities of individual meteorological parameters and weather patterns such as thunderstorms, heatwaves and wildfires. The long-term changes in the probabilities of such events are especially relevant from a risk perspective.    

    Insurance gap: Extreme weather risks in Asia-Pacific

    Just one-tenth of weather-catastrophe losses in Asia and Australia/Oceania since 1980 have been covered by insurance. This underinsurance is most extreme in emerging countries. For example, in Asia-Pacific (excluding Japan and Australia) insured losses from weather catastrophes since 1980 are at less than 6% of the overall losses. What's more, the protection gap has not been significantly reduced: from 2018 to 2022, the share of insured losses was around 5%.

    Losses from weather disasters in Asia and Australia/Oceania 1980-2020

    Weather disaster losses 1980-2020: US$ 1,475bn

    Thereof insured losses 1980-2020: US$ 178bn

    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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    Contact us
    Tobias Farny
    Tobias Farny
    Chief Executive (Greater China and Cyber Insurance)
    Roland Eckl
    Roland Eckl
    Chief Executive – Australasia, Greater China, MENA, Africa, Cyber
    Hitesh Kotak
    Hitesh Kotak
    Chief Executive – Japan, India, Korea, and South East Asia
    Ernst Rauch Portrait
    Ernst Rauch
    Chief Geo & Climate Scientist
    Climate Change Solutions Department