Insurance and reinsurance broker Aon’s recently published Weather, Climate and Catastrophe Report: Asia Pacific Insights, identifies global natural disaster and climate trends in the region, highlighting a large protection gap in the region.
The report reveals that natural disasters in the Asia Pacific (APAC) region in 2022 caused $80 billion in economic losses, of which only $11 billion was covered by insurance. This means that a significant $69 billion, or 86% of the total was not covered by re/insurance protection, highlighting just how large the protection gap (disparity between economic and insured losses post-event) is in the region.
According to Aon, 2022 was the fifth costliest year on record for insurers globally, with six of the top 10 events occurring in Asia Pacific.
Once again, flooding remained a threat with annual losses exceeding $30 billion every year since 2010. Pakistan, India, southern China and South Korea all saw record rain and significant flooding last year. Floods in Pakistan were the costliest event for the flood peril, tied with seasonal flood losses in China, which were at their highest since 2016, notes Aon.
All in all, Aon finds that flood was the costliest peril for the third year running, accounting for more than 61% of the total economic loss.
The only two geophysical disasters that cost approximately $1 billion in economic losses in 2022 were the March Fukushima Earthquake in Japan, and the September Sichuan Earthquake in China.
Aon’s report notes that 31,300 people lost their lives due to global natural catastrophe events in 2022, with Asia Pacific accounting for approximately 4,000 deaths.
George Attard, Chief Executive Officer, of Reinsurance Solutions, Asia Pacific at Aon said, “The extreme weather in the region throughout the year highlights the continuing need to strengthen resilience by adopting effective adaptation and risk management strategies. This includes improved mitigation through warning systems and advanced analytics that help assess the potential impact of events and enhance disaster response.
“There is an increasing need for organisations to shift to a data-driven and analytical approach to address and navigate emerging and evolving risks, build a resilient workforce, and have access to new forms of capital, as well as scalable innovative solutions regardless of their size. The data, statistics and analytics of this report are intended to help organisations understand the natural disaster and extreme weather trends, quantify and qualify issues influencing catastrophe risk, and make better decisions to protect and grow their business.”
Brad Weir, Head of Analytics for Asia at Aon, said, “While a majority of total losses in 2022 were left uninsured, the 86%‘protection gap’ highlights the vulnerability of our region’s communities, but also the opportunity for new solutions. As climate change continues to affect the frequency, location and intensity of weather events, the physical and tangible risks will continue to evolve. Through private and public sector collaborations and data-driven analytics, organisations can help turn climate science into action to enhance their own risk mitigation and also support addressing the protection gap to better safeguard the communities in which we live and work.”
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