current
Climate Risk Widens Gap
The increasing frequency and severity of natural disasters are exacerbating the insurance protection gap.
Timeframe
immediate
Categories
Subcategories
Impact areas
Detailed Analysis
Climate change is leading to a rise in natural disasters, resulting in greater economic losses and a widening gap between insured and uninsured losses. The report emphasizes that "From 2016 to 2023, nearly 70 percent of global losses from natural disasters were not insured, equaling up to about $260 billion in uninsured losses in a given year." This highlights the inadequacy of current insurance models in addressing the growing risks associated with climate change. Insurers are responding by enhancing underwriting sophistication, investing in risk mitigation efforts, and adjusting products and terms to reflect the changing risk landscape. However, the continued rise in uninsured losses necessitates further innovation and collaboration between insurers and public entities to develop more effective risk transfer mechanisms.
Context Signals
Nearly 70% of global losses from natural disasters were uninsured between 2016 and 2023.
The first half of 2024 saw the second-highest insured losses from severe thunderstorms on record.
Average annual losses from natural disasters in the US are expected to increase by up to 20% in the next decade.
Edge
Development of innovative insurance products and public-private partnerships to address the growing protection gap.
Increased use of technology, such as AI and geospatial analysis, for more accurate risk assessment and pricing.
Focus on risk mitigation and resilience building to reduce the impact of natural disasters.
