AON Study: “2022 global economic losses from natural disasters reached $313 billion”

AON, one of the global leaders in the insurance broker market, announces the results of the worldwide  study “Weather, Climate and Catastrophe Insight,” which measures how these elements have changed and influenced society, the economy, and the insurance system. According to the study published in 2023, global economic losses in 2022 from natural disasters reached $313 billion, 4% above the 21st-century average, and global insured losses from natural disasters in 2022 are estimated at $132 billion.

Figures show that global economic losses from natural disasters in 2022 reached $313 billion, 4% higher than the 21st-century annual average. Insurance companies covered $132 billion, marking 2022 as the fifth costliest year in history for the insurance industry.

According to data cited in the AON study, approximately 75% of global insured losses were recorded in the United States. These figures highlight an alarming reality: a global protection gap of 58%, which means that almost half of the economic losses caused by natural disasters are not covered by insurance.

Extreme climate events, including heat waves, droughts, and floods, continue to set new records and challenge the global economy and society. In this context, the role of insurance companies becomes essential to mitigate the economic impact of these disasters and improve the resilience of affected communities.

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In this regard, AON, a global leader in risk management consulting and insurance services, has launched a series of initiatives and partnerships to close the protection gap and accelerate the transition to a sustainable and climate-resilient economy. The company develops complex risk assessment models considering diverse and ever-changing climate-related scenarios. They help organizations better understand and prepare for the risks of climate change.

The figures in this report highlight the importance of strengthening risk mitigation efforts and investing in practical tools and solutions for future mitigation and adaptation practices.

“In a globalized world, the consequences of natural disasters extend far beyond the immediate geographic areas of impact. This is a reality that Romania knows, even if it is not directly affected by storms and does not experience the same severity of climatic phenomena as other regions”, said Eugen Anicescu, CEO of AON Romania.

A recent example is the devastating earthquake in Turkey, which caused approximately $90 billion in damage. According to the AON study, about 42% of the damages were covered by insurance.

“The earthquake that occurred in February of this year is a tragedy for Turkey and has global repercussions, including here in Romania. It is essential to understand that insurers have a key role in managing these challenges by implementing protection and adaptation strategies at the market level. When the insurance market is affected in a country, prices will rise not just in that particular market but globally. At the same time, it is important to discuss property loss and damage, whether residential or commercial and face the reality that climate risks are a global problem that requires collective and responsible action. We need an integrated global and local strategy to enable effective adaptation and protection against future climate risks. We should also understand that as Romania’s economy grows the value of the damages that we will have to cover individually or collectively will also increase“, Eugen Anicescu explained.

Although Romania is far from the United States in the ranking of damage caused by natural disasters, in 2022, 163,000 hectares of land burned on the country’s territory. This balance caused considerable damage and ranked the country in 2nd place in Europe, after Spain, where they burned 316,000 hectares of land.

According to data from EFFIS satellite monitoring, the total area burned by forest fires in the European Union in 2022 was the second largest this century, surpassed only by 2017.

The AON study predicts that along with Romania, countries such as Austria, Bosnia and Herzegovina, Bulgaria, Croatia, and Cyprus, present a high risk of catastrophes caused by earthquakes.