Aon flags ‘major concern’ as only 31% of $3tn weather losses insured
Aon has flagged a “major concern” that only 31% of $3tn of economic losses from extreme weather events in the past decade have been covered by insurance.
The broker said in a new climate change report that weather-related losses account for 85% of total natural peril losses, which are becoming more severe due to climate change, putting more lives, livelihoods and property at risk.
The report pinpointed Hurricane Ida, recent European flooding and wildfires in the US as events showing the fingerprints of climate change.
On Ida – which caused extensive flooding in the northeast – Aon said that there was clear evidence that US precipitation trends had increased in recent decades.
The broker said that the number of storms undergoing rapid intensification was increasing, especially for stronger storms.
“The growing concern is that these periods of strengthening are occurring up to when storms come ashore; often striking at peak intensity,” the report noted.
Regarding the European floods, Aon said that the event was “emblematic”, setting new records as the costliest catastrophe for the local insurance sector.
“The tremendous volume of rainfall that occurred was consistent with what scientific research continues to highlight as expected with warming in the oceans and atmosphere,” Aon said.
The broker said that changing climate conditions in the US had led to a “noticeable shift” in the seasonality of wildfire events.
“No region of the world has seen more dramatic impacts of worsening fire conditions and resultant damage than the state of California in the United States,” Aon said.
The broker called for increased strategic planning to help mitigate the effects for residents and businesses in fire-hit areas.
Amongst Aon’s suggestions were defensible space between vegetation and structures, fire resistant building materials and improved wildfire risk mapping, as well as investment in levees and stormwater systems.
"Short-term expenditures can lead to significant long-term savings if appropriate infrastructure mitigation is taken to limit the risk of sea level rise and hazard impacts to vulnerable coastal properties,” the broker outlined.