The increased influence of climate change suggests that, in what regards floods, what is considered a 1-in-100-year event (1% chance of occurring at a location in any given year) today may becoming a 1-in-75 or 1-in-50-year event in the future, Aon's recently released "Real-Time Climate Change" report shows.
"As the world contemplates the current and looming impacts of climate change, we must examine the effects we are already experiencing today and the steps that can be taken to start mitigating and preparing right now," the report reads. As such, it looks at the natural catastrophe events happening today in the context of climate change, and highlights ways in which the risk could be mitigated, focusing on the areas of tropical cyclone, flood, and wildfire. The report reveals that in the past decade alone, weather-related disasters have resulted in nearly USD3 trillion in economic damage, accounting for 85% of total natural peril losses. The figure includes losses caused by perils as tropical cyclones, flooding, and wildfires, all of which demonstrating a changing behavior that is putting more lives, livelihoods and property at risk.
In Aon's view, there is a major concern that only about 31% of these total losses were insurance covered, while there are reasonable expectations that as such events will become more frequent or intense, assets exposed to the risks are of increased value. To illustrate the reasons beyond its expectations, Aon's report analyzes three major events: Tropical Cyclone Isa, floods that hit Europe and Asia this year, in July and the extreme wildfires in the US.
For Europe, the flash flooding in Western Europe, primarily Germany, Belgium, and the Netherlands that occurred in mid-July "rewrote history books by setting new records for the costliest catastrophe events for the local insurance sectors. Among others, the event showed once again that even in countries with a high insurance coverage of the weather risks, the insurance take-up is uneven across different regions, leaving some of them with a large insurance gap.
Also, while the global debate on how strong the climate change contribution to the increased frequency and severity of several types of natural hazards is still ongoing, extreme temperatures, heavy rainfall and draught are the three risks for which the climate change influence is considered the strongest and rather unarguable.
Read the full report here.