Munich Re (Munich Re) is considered the largest reinsurer in the world and, as such (“reassekurance”), assumes insurance risks and publishes an annual balance sheet of global losses caused by natural disasters. According to current figures published on Tuesday, these caused total damage of 250 billion dollars (about 228 billion euros) last year.
The biggest and most tragic catastrophe was the earthquake in the border area between Syria and Turkey, on February 6, with around 58,000 deaths and damages amounting to around 50 billion dollars (only a small part is insured), about a tenth of the total damage, according to Munich Re. In addition, there were numerous “small” disasters that, together, caused enormous damage. In total, around 74,000 people will lose their lives to natural disasters in 2023, more than at any time since the Haiti earthquake in 2010.
Even without many “big events”
“The year 2023 was once again characterized by very high insured losses due to natural catastrophes, although there were no extreme individual losses,” wrote Thomas Blunck, a board member of the insurer founded in 1880, on Tuesday.
Portal/Claudia Greco First floods, then drought in Italian Emilia-Romagna in early June 2023
“The balance of losses last year was comparable to previous years. “But what is remarkable is that this happened without a single event, with an insured loss of more than ten billion dollars,” said the chief climate scientist at the world's largest reinsurer, Ernst Rauch.
Storms are no longer “secondary” today
In 2022, Hurricane “Ian” alone caused damage worth 100 billion dollars (more than 91 billion euros) in the Caribbean and the USA, 60% of which was borne by insurance companies. Last year, severe weather and strong hail storms dominated the natural disaster toll, especially in North America and Europe. However, Hurricane “Idalia” also left a trail of destruction in the southern United States in August 2023.
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According to Munich Re, “normal” storms alone caused $76 billion in damage last year, of which $58 billion was insured. “We have to prepare for such levels of damage,” warned Rauch. “Damage events that were previously seen as secondary have become a major driver of overall losses.” Reinsurers that insure primary insurers against such catastrophes also have to take this into account in their prices, according to business management.
“Global warming increases climate extremes”
According to Rauch, climate change is also a cause of extreme weather events. At the end of November, global temperatures in 2023 were 1.3 degrees above the value from the period between 1850 and 1900. “Global warming, which has been accelerating for years, is increasing climate extremes in many regions and therefore , the potential for damage.
Graphics: APA/ORF; Source: Munich Re Last year's biggest natural disaster: the earthquake in the border area between Turkey and Syria in February
“At higher temperatures, more water evaporates, and with additional moisture in the atmosphere, the potential energy for severe storms increases,” said the German climate expert. The economic consequence is that insurance premiums for buildings in hurricane regions like Florida now amount to up to several thousand dollars per year.
The global average temperature has increased significantly
According to the EU's Earth observation program Copernicus, last year remained slightly below the 1.5 degree threshold for global warming. Global temperatures were 1.48 degrees Celsius higher than the average for the years 1850 to 1900, according to data released on Tuesday.
Temperatures in 2023 are likely to be higher “than in the last 100,000 years”, said Samantha Burgess, deputy director of the Copernicus Climate Change Service (C3S), on the occasion of the publication of the “Global Climate Highlights 2023” report. . . According to Copernicus, the global average temperature in 2023 was 14.98 degrees Celsius, 0.17 degrees higher than the hottest year so far, 2016.
What does it cost to do nothing?
For Austria, the Institute for Economic Research (WIFO) recently examined the question of how such inaction would affect the national budget in the long term under the heading “Budgetary costs and risks due to inaction on climate policy and climate risks”.
There is currently a lack of a comprehensive view of the possible costs and risks resulting from inaction on climate policy or climate risks for the public sector”, he states in the introduction to the “Policy Brief” published on Tuesday. In any case, the factor of climate change would have to be taken into account in budget planning – higher expenses or lower revenues.
Up to seven billion euros per year?
The Ministry of the Environment, which commissioned the WIFO study, referred in a press release to “massive costs due to inaction on climate protection”, in numbers a “burden on the State budget already” of 5.4 to seven billion euros per year. At the same time, the ministry headed by department head Leonore Gewessler (Greens) referred to measures that have already been taken.
These have already had an impact, such as the growing share of renewables in the electrical mix, Gewessler was quoted in the broadcast. “Right now, investments and measures for greater climate protection are having a double effect – for the economy and for climate protection. That’s why we will continue to invest in a good future in 2024.”