Extreme Weather Events Drive Record Insurance Costs, Industry Warns of Uninsurable Areas

Extreme weather events such as wildfires, storms, hurricanes, and flooding are driving up the costs for the insurance and reinsurance industry significantly, with the UK experiencing its worst weather damage insurance claims on record last year. The increase in claims is attributed not only to the frequency and severity of these events but also to socioeconomic factors such as claims inflation, high property concentration in hazardous areas, and economic growth. The insurance industry, while adapting to these challenges, emphasizes the importance of investing in protection and resilience, alongside governmental support to manage the increasing risks associated with global warming.

• UK’s weather damage insurance claims hit a record high last year due to extreme weather events.
• Swiss Re, a major reinsurer, highlighted underestimation of fallout from natural disasters and declared some areas of Europe as uninsurable.
• Factors contributing to the rise in insured losses include not only extreme weather but also socioeconomic factors like claims inflation, property concentration in hazardous areas, and economic growth.
• The insurance industry is focusing on measures to estimate and assess risk more accurately, investing in protection and resilience against future events.
• There is an emphasis on the need for state incentives to invest in protection and enhance resilience in nature to cope with the effects of global warming.
• The question of insurability and sustainability in high-risk areas raises concerns about the habitability of such regions in the future.
• Insurance is part of the solution, but protection and resilience, along with increased awareness and action, are crucial to address the challenges posed by extreme weather and climate change.

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