According to WTW’s latest Natural Catastrophe Review, the insurance protection gap for natural catastrophes is estimated to stand at 60%, as global insured losses surpassed $140 billion in 2024, marking the fifth consecutive year insured damages exceeded $100 billion.
The global advisory, broking, and solutions firm highlighted several major events that contributed to these figures, including Spain’s costliest natural catastrophe, the Valencia floods, which resulted in €3.7 billion in claims; Canada’s highest recorded insurance claims for natural catastrophes ($5.6 billion); hurricanes Helene and Milton making landfall in Florida, causing a combined $45 billion in damages; and the deadliest Western Pacific typhoon season since 2013.
WTW’s Natural Catastrophe Review also stated that U.S. severe convective storms continued their recent trend of elevated damages in 2024, with total insured losses exceeding $50 billion for the second year in a row.
As mentioned, global flooding caused significant disruption, with Europe enduring one of its worst years on record for flood-related damages. In addition to the flooding in Spain, Storm Boris brought extreme rainfall and flooding to Central and Eastern Europe, with claims totalling $2.2 billion.
“Meanwhile, in South Asia, intense monsoon rains affected millions, disrupting key sectors such as agriculture, energy, and manufacturing,” WTW’s Natural Catastrophe Review added.
With insured losses surpassing $140 billion in 2024, and total economic damages exceeding $350 billion, WTW suggested the protection gap remained substantial, highlighting the inadequacy in resilience to climate-related risks.
As per the Natural Catastrophe Review, 2024 also became the first year on record to exceed 1.5°C above pre-industrial levels, a significant milestone.
“The mounting financial impact of natural catastrophes continues to be driven by the expansion in both the number and value of assets at risk. However, climate change is also playing an increasingly prominent role, with several events in 2024 being linked to human-caused warming, including hurricanes Helene and Milton, the South American drought, and Storm Boris, which impacted Europe,” WTW said.
With all this in mind, the firm has emphasised the need for enhanced risk modelling, innovative insurance solutions and proactive adaptation and mitigating measures to address the growing impacts of climate change on economies and societies.
Hélène Galy, Head of WTW Research Network, commented, “Our long-standing collaboration with scientists gives us better insights into growing exposure to perils, especially perils that are changing rapidly.
“It’s easy to be lured by the increased sophistication of risk models: a deeper understanding of data and science are critical to identifying real improvements and remaining limitations of risk models, to make them more useful to decision-makers.”
Peter Carter, Head of Climate Practice, WTW, said, “Credible data and risk models can help you make informed choices about trade-offs: making investments to become more resilient, buying more insurance protection, or accepting the risk. Beware of becoming overly committed to one approach.
“Simply having lots of data or a single modelling approach may not give the robust risk perspectives you need. Seeking expert input and a more nuanced modelling approach, where you challenge your core modelling approach (“defender”) with a different approach (“challenger”) will provide alternative perspectives. Then you will navigate an increasingly volatile natural hazard environment much more effectively.”
In related news, Aon recently disclosed its own research on the matter above, stating that global insurance losses in 2024 were 54% higher than the 21st-century average, covering $145 billion of the $368 billion in natural disaster damages, leaving a protection gap of $223 billion, or 60%.
According to Aon, the $368 billion in economic losses caused by natural disasters in 2024, driven primarily by hurricanes and severe convective storms in the U.S., reportedly marks the ninth consecutive year of losses exceeding $300 billion.
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