A new report by the Swiss Re Institute has indicated that climate change will have a larger impact on economic losses in the future, with the US and Philippines projected to be the hardest hit.
The report listed four key weather perils, namely floods, tropical cyclones, winter storms in Europe, and severe thunderstorms, which are currently causing global economic losses of $200 billion yearly, as major threats to future weather climate.
In the new analysis, Swiss Re reported that with annual economic losses of 3% of GDP, the Philippines is reportedly the most impacted by the four weather perils of all 36 countries as well as also being exposed to a high probability of hazard intensification.
According to the report’s findings, the US is second-most exposed. At USD 97 billion (0.38% of GDP), Swiss Re noted that the US experienced the highest economic losses in absolute terms from weather events worldwide and at the same time, a medium probability that hazards will intensify.
The Swiss Re Institute’s report further reflected: “In general, countries with sizeable insurance protection gaps and where the establishment of loss mitigation and adaptation measures lags the rate of economic growth, are most financially at risk from hazard intensification. Fast-growing Asian economies like Thailand, China, India, and the Philippines are most vulnerable.”
The Institute’s analysis also noted that while flood risk is projected to intensify globally, the main driver of major weather-related economic losses in the US, as well as in East and Southeast Asia, are tropical cyclones.
“Today, in absolute terms, economic losses from weather events in the US are the highest in the world, mostly driven by tropical cyclones (hurricanes). Severe thunderstorms also account for a large share of the economic losses,” the Swiss Re Institute said.
Commenting on the report’s findings, Swiss Re’s Group Chief Economist, Jérôme Jean Haegeli, said: “Climate change is leading to more severe weather events, resulting in increasing impact on economies. Therefore, it becomes even more crucial to take adaptation measures.
“Risk reduction through adaptation fosters insurability. The insurance industry is ready to play an important role by catalysing investments in adaptation, directly as a long-term investor and indirectly through underwriting climate-supportive projects and sharing risk knowledge.
“The more accurately climate change risks are priced, the greater the chances that necessary investments will actually be made”, Haegeli stressed.
