Tuesday, 23 April 2024

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Business News

Natural disasters caused an estimated $65 billion in losses last year for Asia-Pacific

Insurance prices need to reflect an increase in natural disasters: AXA CFO

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Economic losses in the Asia Pacific region soared to $65 billion due to natural disasters, mainly fueled by floods in China and droughts in India, as reported by insurance company Aon.

Hadynyah | E+ | Getty Images

Economic losses in the Asia Pacific region due to natural disasters soared to $65 billion in 2023, mainly fueled by floods in China and droughts in India, insurance company Aon said in a recent report.

Of the total losses, only 9%, or $6 billion, were covered by insurance, falling short of the 21st-century average of $15 billion.

The report found that floods remained the most costly threat in Asia-Pacific for the fourth consecutive year, representing over 64% of total losses in 2023. Annual flood losses have exceeded $30 billion since 2010.

China suffered the heaviest losses in Asia-Pacific with $32.2 billion in flood-related losses, or over half of total losses in the region, the report said.

Hong Kong, South Korea, India and Pakistan also experienced significant flooding and record rainfall events throughout the year. The South Asia floods in particular, resulted in nearly 2,900 deaths. Aon noted that flood-related losses have totaled more than $30 billion every year since 2010.

The report also highlighted rising temperatures and unforeseen heatwaves, particularly drought conditions in China and India. Aon noted that while heatwaves are among the “deadliest perils, these risks have traditionally been a blind spot in the insurance industry.”

The insurer also said major earthquakes contributed to heightened damages, following tremors in Afghanistan’s Herat Province in October and China’s Gansu Province in December, claiming nearly 1,500 lives and damaging over 200,000 homes, respectively. 

“With climate driving new extreme weather records, businesses increasingly need to quantify and address the direct and indirect impact of climate risk,” said George Attard, CEO of Reinsurance Solutions for Aon’s Asia Pacific region.

Although climate change typically isn’t listed among the top ten risks for businesses, he said it directly impacts four key areas: business interruption, shifting market trends, supply chain disruptions and regulatory changes.

Globally, natural disasters caused an estimated $380 billion in economic losses in 2023, representing a 22% increase from the 21st-century average, according to the report. This surge was primarily driven by earthquakes and severe convective storms in the U.S. and Europe.

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