5 lessons in 5 charts: resilience in an age of climate extremes

These five graphs show what we need to know about climate risk trends

Bushfires in Australia, typhoons in Japan, flooding in many areas of the world – recent natural catastrophes point to a world increasingly at risk from climate change.

The main reason for this is the dovetailing of two trends: a warming climate and global economic growth, particularly urbanisation and development. Increasingly, we're building, living and working in the very places most exposed to the impacts of global warming, namely in expanding urban centres along the coast, on flood plains and near forested wildland. Meanwhile, climate change effects are increasingly evident as a major risk factor and likely to expand losses from weather-related disasters in the coming decades, according to Swiss Re Institute's newest sigma publication.

If we don't adapt, these developments could jeopardise global resilience at a time when our planet is already under great strain and call into question the insurability of future risks. If, however, we understand today's trends and act now to mitigate the risks, we'll be much better prepared to cope with a world of climate extremes.

These five graphs offer lessons to consider.

1. Secondary perils linked to extreme weather are a sign of climate change and are responsible for most insured natural catastrophe losses. 2019 was no exception.

Global insured losses from natural catastrophes in 2019 stood at USD 52 billion. Weather-related events were again the main contributors. As evident in the last three years, the damaging effects manifest most notably in secondary perils linked to extreme weather. In 2019 specifically, the rainfall-induced floods that came with Typhoon Hagibis, the storm surge driven flooding from Cyclone Idai in Mozambique, and monsoon rains in Southeast Asia and from other weather systems wreaked economic and humanitarian havoc. Record-high temperatures in eastern Australia kept wildfires burning across millions of hectares of bushland in the longest-running wildfires the country has ever seen.

2019 catastrophe losses in a nutshell

Number of weather-related events and losses, 1970-2019

Economic losses from extreme weather events, 1980-2019

Global economic versus insured losses, 1980-2019

5. Climate change is a manageable risk for the insurance industry. But risk modelling and underwriting processes need to overcome "historic loss bias" and adapt to maintain future insurability.

Climate change effects remain insurable today. But the long-term risk of unmitigated climate change could undermine the insurability of assets, particularly in highly exposed regions. The main underwriting risk for insurers is to underestimate premiums due to reliance on historical loss data or incomplete/outdated models. The industry therefore needs to actively embed and dynamically track the effects of the warming climate, adapting models to a profoundly changing risk landscape. Many catastrophe models do not fully account for rising exposure from increased value concentration in a rapidly urbanising and more vulnerable world.

Historic modelling bias

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