Climate Change Drives Up Frequency and Severity of Weather Events, Pushing Disasters’ Cost to Record Levels

The financial toll from natural disasters in 2024 has surged to an alarming US$438.6 billion (S$320 billion), with reinsurance giant Munich Re attributing much of this devastation to the intensifying effects of climate change. The reinsurance industry, which helps spread risk among insurance companies, reported that weather-related catastrophes, driven by a warming climate, accounted for 93% of the total losses and 97% of insured losses.

According to Munich Re’s annual report on natural catastrophes, this year stands as the third costliest since 1980 for the industry. The report also highlights the significant human cost of these disasters, with around 11,000 people losing their lives, far fewer than the annual average of 17,500 over the last decade. However, a staggering US$180 billion worth of damages were uninsured.

Munich Re’s chief climate scientist, Tobias Grimm, remarked, “Climate change is showing its claws, with its destructive forces becoming increasingly evident.” He went on to explain that the planet’s weather system is now shifting into “a higher gear,” bringing more frequent and extreme events.

Some of the costliest and deadliest disasters in Asia were the earthquake in Japan on New Year’s Day, which claimed 245 lives and caused US$15 billion in damages, and Typhoon Yagi, which swept through multiple countries in Southeast Asia, causing US$14 billion in losses. A major flood in China between June and July resulted in US$12 billion in damages, with only US$400 million covered by insurance.

The most expensive disasters of the year were the hurricanes Helene and Milton, which ravaged the US in September and October, resulting in 254 deaths and a combined US$94 billion in damages, of which US$41 billion was insured.

In Europe, record floods in Spain also wreaked havoc, killing 229 people and causing US$11 billion in damages, only a fraction of which was insured. Alongside floods, tornadoes, hailstorms, and wildfires took a heavy toll across the globe.

Dr Thomas Blunck, a member of Munich Re’s board, stressed the need for societies to brace themselves for worsening weather catastrophes. He noted that a much clearer understanding of climate change’s role in these events has emerged, with climate attribution science allowing scientists to quantify the extent to which climate change contributed to specific disasters.

For example, studies by World Weather Attribution (WWA) revealed that climate change amplified both the intensity and frequency of Hurricanes Helene and Milton. For Helene, climate change increased rainfall by 10%, while also intensifying winds by about 21km/h (11%). Similarly, the floods in Spain were found to be 12% more intense due to climate change and were twice as likely to have occurred in the current warming climate.

Looking ahead, the report highlights the growing challenge of rising insurance premiums as natural disaster losses climb. Mr Grimm pointed out that as disaster-related losses increase, insurance premiums are unlikely to decrease. He stressed that improving construction standards and investing in prevention can help lower future losses and make premiums more affordable, especially for countries and communities already struggling with high-risk conditions.

While early-warning systems can reduce fatalities, Grimm warns that governments need to do more to invest in preventative measures. “Financial aid after disasters is not enough,” he said, advocating for greater investment in mitigation efforts before disasters strike.

The financial burden of escalating weather extremes is increasingly being felt worldwide, but it is the people in poorer nations with limited insurance coverage or governmental support who bear the heaviest costs.