LONDON, January 30, 2025 — As 2024 becomes the first year to exceed 1.5°C warming above pre-industrial levels, the insurance protection gap for natural catastrophes is estimated to stand at 60%, according to WTW’s Natural Catastrophe Review (July – December 2024). published today by WTW (NASDAQ: WTW), a leading global advisory, broking, and solutions company.
Natural catastrophes continued to put strain on global insurance markets. Global insured losses surpassed $140 billion in 2024, marking the fifth consecutive year insured damages exceeded $100 billion. Total economic damages surpassed $350 billion, once again highlighting the inadequacy in resilience to climate-related risks. Adding to this pressure, wildfires in Los Angeles have already driven insurance loss estimates in the region of $30-$40 billion in the first few weeks of 2025.
The Natural Catastrophe Review is a biannual publication that delves into the physical, vulnerability and socioeconomic factors that contributed to the largest natural catastrophes in the second half of 2024 and goes beyond the numbers to provide new perspectives to help with natural catastrophe risk management and resilience across multiple sectors.
Other key points to note:
Hélène Galy, Head of WTW Research Network said: “Our long-standing collaboration with scientists gives us better insights into growing exposure to perils, especially perils that are changing rapidly. It’s easy to be lured by the increased sophistication of risk models: a deeper understanding of data and science are critical to identify real improvements and remaining limitations of risk models, to make them more useful to decision-makers.”
“Credible data and risk models can help you make informed choices about trade-offs: making investments to become more resilient, buying more insurance protection, or accepting the risk.”
Peter Carter | Head of Climate Practice, WTW
Peter Carter, Head of Climate Practice, WTW, said: “Credible data and risk models can help you make informed choices about trade-offs: making investments to become more resilient, buying more insurance protection, or accepting the risk. Beware of becoming overly committed to one approach. Simply having lots of data or a single modelling approach may not give the robust risk perspectives you need. Seeking expert input and a more nuanced modelling approach, where you challenge your core modelling approach (“defender”) with a different approach (“challenger”) will provide alternative perspectives. Then you will navigate an increasingly volatile natural hazard environment much more effectively.”
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Natural Catastrophe Review (January – June 2024) launched by WTW provides in-depth analysis of catastrophe risk by leveraging collaborations with research institutions.
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