Natural disasters: record damage and high risks for insurers!

Natural disasters: record damage and high risks for insurers!

insurance companies face a significant increase in damage caused by natural disasters. According to Tagesschau it is estimated that this damage has reached values ​​of up to $ 320 billion. It is noteworthy that around 90 percent of the damage is attributed to the weather, of which only a third was insured. As a result, the insurance companies had to pay for damage of around $ 100 billion.

The situation is not only shaped by increasing damage: numerous large insurers also report on partial records. Munich Re is a key player who expects an above-average hurricane season. The need for insurance companies to efficiently evaluate and secure risks has obviously increased. This knowledge coincides with the statements of munich Re that emphasize that deep knowledge about the changing risks is essential.

The influence of climate change and avoidance of damage

A future-oriented concept that is discussed by the insurance and reinsurance companies is the transfer of risks to the financial market. This is done, for example, through disaster bonds (CAT bonds), which promise high interest rates, but are also associated with considerable risks. In the event of damage, a total loss can occur for the bond buyers.

Economist Arne Holzhausen emphasizes the urgency of a rethink in order to better avoid future damage caused by natural hazards. Suggestions for preventive measures include the construction of storm and earthquake-proof infrastructures and protection against flooding. In particular, the costs of such prevention measures are growing and thus constant a burden for the policyholder.

The role of the insurance industry

Reporting on natural hazards has changed in recent years. Data show that the damage caused by natural hazards in property and car insurance in 2023 was 5.6 billion euros, which illustrates the need for courageous measures to adapt to new climate conditions. The General Manager of the GDV, Jörg Asmussen, emphasizes that society has to prepare better for the weather extremes caused by climate change.

The accumulation of flood events shows that social preparation for such natural events is insufficient. The annual natural hazard report contains extensive data collections that serve to analyze the damage through natural hazards and to support climate research. When climate change progresses, it is predicted that the damage due to these developments will be at least twice as high by 2050, which underlines the urgency of the action. The GDV provides information in your data service that summarizes the knowledge of German insurers about damage through nature.