Hurricanes, storms, floods, and other natural disasters caused an estimated $140 billion in insured losses in 2024, according to Munich Re's report released on Thursday, according to a Reuters report.
Munich Re is the world’s largest reinsurance — insurance purchased by insurers to cover large losses — company.
The $140 billion bill marks a significant increase from the previous year, 2023, and positions 2024 as one of the most costly years on record in terms of insured damages.
The Munich Re report highlights that this year’s financial toll from natural catastrophes covered by insurance is notably higher than the $106 billion recorded in 2023 and well above long-term averages.
The losses in 2024 are also higher than the estimates provided by Swiss Re, another major global reinsurer, in its December report.
Munich Re emphasised that the devastating financial impact of these disasters underscores the growing threat of climate change.
The company stressed that global temperatures continue to rise, which is contributing to an increase in both the frequency and severity of extreme weather events worldwide.
The company's management board member, Thomas Blunck, pointed out to Reuters that the situation is growing increasingly dire, with natural catastrophes becoming more intense and destructive.
"One record-breaking high after another – the consequences are devastating. The destructive forces of climate change are becoming increasingly evident," Blunck told Reuters, illustrating the urgency of addressing climate change as it manifests in increasingly severe natural events.
In 2024, the insured losses from natural disasters were the third most expensive year for insured losses since 1980, according to Munich Re’s figures.
While insured losses represent a portion of the total costs, the company also noted that total losses from natural catastrophes — including those not covered by insurance — reached $320 billion in 2024.
This figure marks an increase from the $268 billion recorded in 2023 and highlights how these events are escalating.
The total cost of disasters is not only a financial burden on the insurance industry but also underscores the far-reaching impacts on societies, economies, and infrastructures around the world.
The most significant disasters in the US that contributed to the overall tally of losses in 2024 were hurricanes Helene and Milton. These powerful storms were among the most destructive to hit America, and their combined costs have been labelled as the costliest events of the year.
Hurricane Helene made landfall in the southeastern US in late August, battering coastal areas with devastating winds and heavy rainfall.
The storm, which reached Category 4 strength, caused widespread flooding in the region, leading to significant damage to both residential and commercial properties.
The storm also disrupted major infrastructure, including power grids, causing widespread power outages that lasted for days.
The economic losses from Hurricane Helene were not limited to physical damage; it also severely impacted the local economy, including agriculture, tourism, and trade.
The extensive flooding led to a large number of homes being rendered uninhabitable, and the US government declared several areas as disaster zones, enabling federal funding for recovery efforts.
Hurricane Milton, which struck the Gulf Coast in early September, was another major contributor to the 2024 losses.
Milton intensified rapidly into a Category 5 storm as it approached land, and its catastrophic winds and storm surge caused widespread destruction.
Milton’s impact was felt across multiple states, including Texas, Louisiana and Alabama, where the storm wiped out entire neighbourhoods, causing billions in damages. The economic toll of Milton was compounded by its timing, which coincided with an already strained infrastructure due to Helene’s earlier passage.
Thousands of homes were destroyed or severely damaged, and commercial properties, especially those in the oil and gas industry, were also hit hard. The hurricane also disrupted the energy sector, with oil rigs and refineries forced to shut down, leading to a temporary spike in fuel prices and energy shortages.
Although both hurricanes made landfall in the US, the global nature of the losses and the occurrence of similar events elsewhere make it clear that climate change is not confined to one region.
Natural catastrophes, including floods and storms, wreaked havoc in parts of Europe, Asia, and Africa, contributing to the overall increase in total global losses.
For instance, in Europe, several intense storms caused flash floods and landslides, particularly affecting countries like Italy and France.
In Asia, devastating floods in countries like India and Pakistan resulted in mass displacement and extensive property damage. In Africa, cyclones and storms ravaged coastal regions, leading to significant casualties and loss of infrastructure.
In addition to the major hurricanes, wildfires have also been a key focus of attention in 2024. In California over the last two days, wildfires swept through several communities, forcing tens of thousands of people to evacuate their homes.
The fires, which were some of the largest and most destructive in the state’s history, destroyed entire neighbourhoods and killed dozens of people. Many of the worst-hit areas were in upscale regions of Los Angeles, where wealthy residents were forced to flee as the fires spread rapidly.
The fires are a stark reminder of the vulnerability of even affluent areas to the growing threat of wildfires, exacerbated by climate change.
As temperatures rise and droughts persist, fire seasons in regions like California are becoming longer and more severe.
The Munich Re report also highlights the increasing pressure on the global insurance industry, which must navigate the financial challenges posed by these frequent and expensive disasters.
Insurers are facing mounting claims due to the escalating number of severe weather events, and the cost of reinsurance is rising sharply.
This shift could ultimately lead to higher premiums for policyholders, as insurance companies adjust their pricing models to reflect the growing risks associated with climate change.
Tobias Grimm, Munich Re's chief climate scientist, underscored the reality that climate change is not a distant issue but something that is already having profound effects. "No one is truly safe from the consequences of climate change," Grimm told Reuters, adding that both developed and developing nations are experiencing the impacts of increasingly extreme weather events.
The catastrophic losses from natural disasters in 2024 serve as a stark reminder of the urgent need for action on climate change. Governments, businesses, and individuals must take responsibility for mitigating the impact of these events, which are only expected to increase in frequency and severity in the coming years.
(With inputs from Reuters)