LONDON, July 22, 2024 – Aging infrastructure is leading to increased insurance losses, says a new report launched today by WTW (NASDAQ: WTW), a leading global advisory, broking, and solutions company.
Aging infrastructure is leading to increased insurance losses. Several events in 2024 were either caused by or exacerbated by aging or poorly maintained infrastructure. Aging and poorly managed electricity infrastructure ignited wildfires in Texas, and flooding in Brazil was exacerbated by the inadequate maintenance of flood protection systems. The Rapidan dam failure in Minnesota is another recent example of aging infrastructure not able to cope with present-day hazard
The review outlines key perils which need to be monitored as well as exploring the reasons why those natural catastrophes turned into a natural disaster, going beyond the severity of the event, and incorporating insights into exposure and vulnerabilities of the regions affected. The report also delves into the science behind those events and provides insights on what to watch in the second half of the year.
Other key findings include:
- Climate change is increasing natural catastrophe damages. It is increasing the frequency, severity and volatility of natural perils such as flooding, wildfires and tropical cyclones. WTW Research Network is looking at whether currently-used models are fit for purpose given climate change that has already occurred.
- Secondary perils are on the rise. There has been $30 billion in severe convective storm claims (SCS) already this year, making 2024 one of the costliest insurance years on record for U.S. SCS.
- Insurance protection gaps may be growing. Texas homeowners’ insurance premiums are relatively high compared to the rest of the U.S. and rising due to increased weather-related claims and climate change concerns, and the risk to uninsured homeowners is growing. Protection gaps were also highlighted during the flood events in East Africa and Brazil.
- A very active Atlantic hurricane season is likely to unfold. With record sea surface temperatures and an anticipated transition to La Niña, we’re likely to have an exceptionally active year. Hurricane Beryl started off the season dramatically by becoming the earliest category 5 on record due to the exceptionally high sea surface temperatures. High basin activity won’t necessarily translate directly into landfalls and damage, but it increases the chance and need for organizations to check their disaster recovery plans and think about longer-term planning.
Cameron Rye, Head of Model Research & Innovation in the WTW Research Network said “Offering a smarter way to risk, this report goes beyond the numbers to help you navigate the complex landscape of natural catastrophe and climate risk management”
