2021 Global Modeled Catastrophe Losses
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Here are a few key takeaways from this year’s report:
- While the actual average loss over the past decade is approximately USD 75 billion, our white paper shows that global industry modeled average annual loss is far higher—coming in this year at USD 106 billion – meaning significant cat losses can and will occur under the climatic conditions of today.
- Most financial decisions are being made in the market on a time horizon under 10 years, and AIR’s probabilistic atmospheric peril models have been built and validated to represent the near-term climate on a 0- to 10-year time frame; we will continue to invest in model updates to ensure we are reflecting the changing risk.
- This year, we’ve added another point on the EP curve representing the 20-year return period (5% exceedance probability), which illustrates the fact that there is a greater than 40% chance the insurance industry will suffer losses in excess of USD 200 billion in the next decade before accounting for exposure growth or climate change.
- For the first time, this year’s edition of AIR’s report includes a section on the latest IPCC report (AR6), which suggests how the protection gap might evolve in a warmer climate. Our report highlights the large and growing protection gap for many of the perils highlighted by the IPCC, including coastal and inland flooding.