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- by Alexander Hübner

Munich (Reuters) - Climate change is driving up losses from storms, floods and other natural catastrophes.

Munich Re calculated global losses of 270 (2021: 320) billion dollars for the past year. Insurers and reinsurers had to cover around 120 billion dollars of this, as shown in Munich Re's natural catastrophe balance sheet published on Monday. Insured losses in 2022 were above the average of the previous five years (97 billion). "100 billion dollars a year or more is apparently the new normal for natural catastrophe losses," Ernst Rauch, Chief Climate Researcher at the world's largest reinsurer, told Reuters news agency. This mark has already been reached five times in the recent past.

"The weather swings are increasing," said Rauch. "In addition, individual events are becoming more extreme" - whether heavy rain, hurricanes, forest fires or heatwaves. The flash flood in the Ahr valley in summer 2021 caused many times the largest flood damage in Germany to date, and the floods in Australia in 2022 were similar. "Climate change is increasingly taking its toll," said Board member Thomas Blunck. Although no storm can be directly attributed to global warming, events that, according to the latest research, are becoming stronger or more frequent due to climate change - or both at the same time - were at the top of the claims list last year.

The most expensive natural disaster in 2022 was Hurricane Ian, which caused devastating damage at the end of September with wind speeds of almost 250 kilometers per hour, particularly in the US state of Florida. Insurers had to compensate around 80 billion dollars of the total damage of 100 billion dollars. This means that "Ian" accounted for a third of the total losses and around half of the insured losses worldwide. Adjusted for inflation, only Hurricane Katrina in 2005 was more expensive.

In the meantime, many reinsurers are no longer prepared to insure such risks in the south-east of the USA due to the accumulation of storms. Prices for natural catastrophe cover have been rising for years. "None of this comes as a surprise to us at Munich Re. We are prepared for far greater losses", says Rauch. The global market leader is still prepared in principle to expand its business "if the premiums are technically at a risk-adequate level - but of course this is not possible at will".

The second largest natural catastrophe of the past year was the monsoon in Pakistan. Rainfall that was five to seven times heavier than usual led to flooding in August. 1700 people died and the damage is estimated at 15 billion dollars. "Almost nothing was insured," explained Munich Re. "Natural disasters hit people in poorer countries particularly hard", said Blunck. Insurers and reinsurers had to pay out 4.7 billion dollars for two waves of flooding in south-eastern Australia, out of a total loss of 8.1 billion dollars. Hailstorms in France caused damage of 7.2 billion dollars, 5.6 billion of which was borne by insurers.

In Europe, too, homeowners, real estate developers and local authorities too often ignore the increasing danger. "They all need to take much greater account of the natural hazards arising from climate change," warns Rauch. Too much is still being built in flood areas and on coasts. The chief climatologist urges adaptation to climate change. "That's the quickest way." The system is far too sluggish when it comes to avoiding emissions. "We need to take action now and need answers for a transitional period."

(Report by Alexander Hübner; Edited by Birgit Mittwollen; If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets)).