In 2021, there were more than 50 severe flood events around the world, resulting in combined economic losses of more than USD 80 billion.
Insured losses were “just” USD 20 billion, further evidence of what has for many years been a large global protection gap.
Beyond flood events, in 2021 natural catastrophes resulted in economic losses of USD 270 billion, and insured losses of USD 111 billion.
The rise in insured losses maintained a long-term trend (based on 10-year moving averages) of 5-7% growth annually. Once again, secondary perils , including floods, were at the forefront, accounting for more than 70% of all insured losses. It was the first year ever that two separate secondary perils events – winter storm Uri in the US and the flood in western/central Europe in July – each caused losses in excess of USD 10 billion.
There has been an upturn in flood insured losses over the last 20 years, cumulatively amounting to close to USD 140 billion since 2001. The costliest event to date remains the 2011 floods in Thailand, which led to insured losses of USD 18 billion (in 2021 prices). The main driver of rising flood losses has been exposure accumulation due to economic growth and urbanisation. However, many other factors such as aging or lack of flood control infrastructure, “soil sealing” in urban areas, more rainfall from tropical cyclones and climate change effects also impact loss outcomes.
Events like the Thailand flood in 2011 and last year’s summer flood in Europe demonstrate that the insured loss potential from single flood events today can equal and even exceed losses from primary peril events. Given the frequency of severe flood events and growing magnitude of large associated losses, it is incumbent on the insurance industry to increase the financial resilience of households, businesses and communities.