China, Asia-Pacific lead in uninsured climate disaster losses, highlighting need for better preparedness, Aon says
- China’s uninsured disaster-related losses have averaged around US$54 billion per year since 2000, the highest in the world, Aon says
- The floods that wreaked havoc in China last summer were Asia-Pacific’s most costly disaster
Natural disasters caused the Asia-Pacific region an estimated US$65 billion in economic losses last year, chiefly from last summer’s catastrophic floods in China and drought in India, according to a new report by Aon.
And while the region only accounted for around 17 per cent of global losses overall, it also registered the largest insurance protection gap, with 91 per cent of its disaster-related losses not having any coverage.
This was significantly higher than the global average of 69 per cent, according to a report released on Tuesday by the UK-headquartered professional services firm. Aon found that insured losses for Asia-Pacific totalled only US$6 billion.
“With climate variability we see natural hazards impacting areas that in recent times may have been largely unaffected, meaning these communities are generally underprepared and may not have adequate insurance in place,” said Brad Weir, Aon’s head of analytics for reinsurance solutions for Asia.
“There is a growing need for advanced climate modelling and risk-assessment analytics for better disaster preparedness, and planning to reduce risk, protect lives and promote resilience.”
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It also found stark regional differences in disaster preparedness: four of the top 10 biggest loss-causing events occurred in the United States, where around 70 per cent of losses are insured.
But the other six most costly events, as well as all 10 events with the highest fatalities, occurred in other countries. These included the earthquakes that struck Turkey and Syria last February, which were both the deadliest and most costly events of 2023.
No region outside the US came close to matching its coverage level, with Asia-Pacific, Latin America, Europe, the Middle East and Africa all having only 17 per cent or less of their losses insured. Turkey and China suffered the largest uninsured losses, followed by the US, Italy, Mexico, Brazil and Argentina.
Typhoon Doksuri’s 2023 havoc leaves US$23 billion gap in coverage
China’s uninsured disaster-related losses have averaged around US$54 billion per year since 2000, the highest in the world, according to the Aon report. The floods that wreaked havoc in its northern and northeastern regions last summer were Asia-Pacific’s most costly disaster, causing more than US$32 billion in damage, nearly half the region’s total losses, of which only US$1.4 billion was insured.
The next most costly were droughts in India and China, which caused around US$3.6 billion and US$2.7 billion in losses, respectively. Cyclone Mocha, which hit Myanmar and Bangladesh last May, and Typhoon Doksuri rounded out the top five most economically damaging events.
A similar report released last month by reinsurance company Swiss Re estimated that insured disaster-related losses could double within the next decade due to rising temperatures and more frequent and severe extreme weather events, making risk mitigation even more crucial.
The city was paralysed by 16 hours of torrential rain that caused millions of dollars of damage, including flooded subway stations, shops and streets, and prompted criticism of the government’s emergency preparedness measures.
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South Korea, Pakistan, India and New Zealand were among the other Asian countries that endured record-breaking rainfall and floods in 2023, according to the Aon report, which cited flooding as a key threat to the region.
Other major catastrophes included earthquakes in Afghanistan’s Herat province and China’s Gansu province, and a weeks-long heatwave in South and Southeast Asia, which led to severe drought and billions of dollars in losses.
