Average Annual Global Catastrophe Losses Reach $151 Billion, Driven by Urbanization and Inflation

According to Verisk’s 2024 Global Modeled Catastrophe Losses Report, the average annual loss (AAL) from global natural catastrophes has surged to $151 billion, with $119 billion attributed to non-crop losses. This increase is primarily driven by rapid urban expansion, inflation, and exposure growth, which have collectively elevated property replacement values across modeled countries by an average of 7.2% over the past five years.

Urbanization plays a significant role in rising catastrophe losses, as more than half of the global population now resides in urban areas. This concentration of assets in high-risk areas has amplified exposure levels, particularly in fast-growing, developing countries. Even in developed nations, ongoing urbanization continues to contribute to increased exposure and, consequently, higher insured losses.

The report also highlights the role of climate change, which currently accounts for about 1% of the annual increase in losses. However, this influence is expected to grow over the coming decades, necessitating the use of advanced risk models to better estimate and manage future losses. Dr. Jay Guin, executive vice president and chief research officer at Verisk Extreme Event Solutions, emphasized the importance of understanding climate variability’s contribution to global insured AAL for accurate risk modeling.

In the United States, severe thunderstorms have been the primary driver of insured losses, surpassing those from hurricanes and earthquakes. The adjusted AAL for U.S. severe thunderstorms is now approximately $39 billion, compared to $23 billion in the previous five years. Verisk’s models suggest that the insurance industry should brace for average annual insured losses of $151 billion, with the potential for even higher losses in particularly severe years.