Aon finds climate-influenced weather is key driver of $268B global damage from 2020 natural disasters with 64% uninsured

Rhea-AI Summary

Aon plc (NYSE: AON) has released its Weather, Climate & Catastrophe Insight: 2020 Annual Report, highlighting that 416 natural disasters in 2020 caused economic losses of USD268 billion, significantly above the century's average. Insurance covered only USD97 billion, leaving a 64% protection gap. The report emphasizes the intersection of climate change and natural disasters, noting the need for improved access to insurance products. Key events included severe storms and flooding, with more than 8,000 lives lost, urging collaboration between public and private sectors to mitigate risks.

Positive

• Released a comprehensive report on natural disasters and climate impact.
• Emphasizes the necessity for improving insurance access and risk management.

Negative

• High protection gap of 64% indicates significant uninsured economic losses.
• Overall economic losses of USD268 billion reflect rising damage costs due to climate change.

"When Natural Disasters and a Pandemic Collide" global annual report explores "connected extremes"

CHICAGO, Jan. 25, 2021 /PRNewswire/ -- Aon plc (NYSE: AON), a leading global professional services firm providing a broad range of risk, retirement and health solutions, today launches its global Weather, Climate & Catastrophe Insight: 2020 Annual Report. The report evaluates the impact of global natural disaster events to identify trends, manage volatility and enhance resilience.  

The report reveals that the 416 natural catastrophe events of 2020 resulted in economic losses of USD268 billion – 8% above the average annual losses for this century – as costs continue to rise due to a changing climate, more people moving into hazard-prone areas and an increase in global wealth. Of this total, private sector and government-sponsored insurance programs covered USD97 billion, creating a protection gap of 64%, which is the portion of economic losses not covered by insurance. This highlights the importance of addressing the underserved by ensuring that there is increased access to affordable insurance products in the future.

"The global response to the socioeconomic volatility caused by the COVID-19 pandemic has increased focus on other systemic risks – particularly climate change – and is causing a fundamental reordering of business priorities. This report highlights the increasing likelihood of 'connected extremes' and reinforces that leading organizations of the future will be defined by their ability to manage the global implications of concurrent catastrophic events," said Greg Case, CEO of Aon. "In a highly volatile world, risk remains ever present, is more connected and, as a result, is also more severe – and 2020 has underscored this reality. It has also emphasized the need for enhanced collaboration between the public and private sectors, which will be essential to close the rising protection gap and build resilience against natural catastrophes."

During the year, more than 8,000 people lost their lives due to natural catastrophes. Tropical cyclone was the costliest peril, causing more than USD78 billion in direct economic damage. It was closely followed by flooding (USD76 billion) and severe convective storm (USD63 billion). From a climate perspective, NOAA cited 2020 as the world's second-warmest since 1880 for land and ocean temperatures at +0.98°C (+1.76°F) above the 20^th-century average.

Steve Bowen, Director and Meteorologist for Aon's Impact Forecasting team, commented: "The world continues to evolve as it is faced with new challenges around natural perils. While many private and public sector entities primarily focus on physical and human hazard risks, an increasing number of global regulative bodies are further pivoting towards how to handle emerging transitional and subsequent reputational risks. This is especially true as the financial and humanitarian risks surrounding climate-enhanced events become more evident on a daily basis. Focus at the corporate and federal levels will be critical around investments in risk mitigation, resilience, and sustainability as the landscape around climate change solutions continues to accelerate with renewed urgency.

Significant regional events during 2020 included:

• Costliest year on record for global severe convective storms led by historic U.S. derecho
• U.S. mainland endured a record-breaking 12 named storm landfalls, including six hurricanes
• Super Typhoon Goni struck the Philippines as the strongest landfalling storm ever recorded globally at 195 mph
• Ciara became Europe's costliest windstorm since Xynthia in 2010
• Drought conditions reduced agricultural crop yields in Brazil and Argentina, burning 30% of the Pantanal Region
• The most widespread Yangtze River Basin floods since 1998 caused USD35 billion of economic damage in China's monsoon season

Exhibit 1: Top 10 Global Economic Loss Events1,2
Date(s)	Event	Location	Deaths	Economic Loss (USD billion)	Insured Loss (USD billion)
June - September	Seasonal Floods	China	280	35.0	2.0
August 21 - 29	Hurricane Laura	U.S., Caribbean	68	18.2	10.0
May 15 - 21	Cyclone Amphan	South Asia	133	15.0	0.5
August 8 - 12	SCS (incl. Midwest Derecho)	United States	4	12.6	8.3
July 3 - 15	Kyushu Floods	Japan	82	8.5	2.0
November 2 - 13	Hurricane Eta	Caribbean, U.S.	309	8.3	0.7
June - September	Seasonal Floods	India	1,922	7.5	0.8
September 14 - 18	Hurricane Sally	United States	0	7.0	3.5
March 22	Zagreb Earthquake	Croatia	2	6.1	0.1
July 30 - August 5	Hurricane Isaias	U.S., Caribbean, Canada	18	5.0	2.7
All other events				145 billion	66 billion
TOTAL				268 billion	97 billion
1	Subject to change as loss estimates are further developed
2	Includes losses sustained by private insurers and government-sponsored programs

The full report and a short film are available on Aon's interactive microsite at https://aon.io/3nsM7cu. To access current and historical natural catastrophe data, as well as event analysis, please visit catastropheinsight.aon.com.

About Aon
Aon plc (NYSE: AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.

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Media Contacts
Alexandra Lewis
+44 (0) 207 086 0541
alexandra.lewis@aon.com  

Andrew Wragg
+44 (0)207 522 8183
andrew.wragg@aon.com 

 

 

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SOURCE Aon plc

FAQ

What were the total economic losses from natural disasters in 2020 according to Aon's report?

According to Aon's report, total economic losses from natural disasters in 2020 reached USD268 billion.

What percentage of the economic losses were covered by insurance in 2020?

In 2020, only USD97 billion of the economic losses were covered by insurance, resulting in a 64% protection gap.

How many natural catastrophes were recorded in Aon's 2020 report?

Aon's 2020 report recorded a total of 416 natural catastrophe events.

What major climate events contributed to the losses in 2020?

Major climate events in 2020 included severe convective storms and flooding, resulting in high economic damage.

How does Aon suggest addressing the protection gap highlighted in the report?

Aon suggests that enhancing collaboration between public and private sectors is essential to close the protection gap and improve resilience against natural catastrophes.