Climate Change

Disaster damage: 2021 sixth year with insured loss bill over $100 billion

India witnessed 2 of the world's 10 most financially devastating climate events in 2021

By Madhumita Paul
Published: Wednesday 29 December 2021
Climate events of 2021 in the world have crossed the $100 billion insured loss threshold: Report Photo: Saikat Bhadra / iStock

Natural disasters led to insured losses over $100 billion in 2021 — the sixth such year — a recent report claimed.
In fact, 10 climate-related events cost $170.3 billion (conversion), according to the paper by United Kingdom-based non-profit Christian Aid.

India witnessed two these climate events in 2021. Both caused financial losses worth more than $1 billion, apart from the loss of lives.

The loss threshold has been crossed for the fourth time in the last five years, noted Steve Bowen, meteorologist and head of Catastrophe Insight at insurers Aon. 

Extreme weather events in 2021, including a deep winter freeze, floods, severe thunderstorms, heat waves and a major hurricane, resulted in annual insured losses from natural catastrophes estimated at $105 billion, the fourth-highest since 1970, according to Swiss Re Institute's preliminary sigma estimates.

The report titled Counting the cost 2021: A year of climate breakdown identified 15 of the most destructive climate disasters of 2021, including 10 that each caused $1.5 billion or more in losses.

The report also looked at five events which, while carrying a lower financial cost, brought devastating human impacts such as drought in Africa and Latin America as well as floods in South Sudan. 

The top 10 most expensive events were the Texas winter storm, Australian floods, French cold wave, Cyclone Tauktae, Cyclone Yaas, European floods, Henan floods, Typhoon In-fa, Hurricane Ida and British Columbia floods.

The most expensive weather disaster of 2021 was Hurricane Ida, which struck the United States in August and early September, the analysis found. It was the fifth-strongest hurricane, cost $65 billion in damages and killed 95 people.

The floods in Europe came second at $43 billion, according to the report.

In Western Europe, floods from July 12-15 this year cost $43 billion and killed 240, while floods in China's Henan province caused $17.5 billion of destruction, killed 320 and displaced over a million.

Four of the 10 costliest events took place in Asia, with floods and typhoons costing a combined $24 billion. But the impact of extreme weather was felt all over the world. 

Australia suffered floods in March which displaced 18,000 people and saw damage worth $2.1 billion while floods in Canada’s British Columbia led to $7.5 billion in damages and 15,000 people fleeing their homes. 

Report author, Kat Kramer, Christian Aid’s climate policy lead, said:

The costs of climate change have been grave this year, both in terms of eye-watering financial losses but also in the death and displacement of people around the world. Be it storms and floods in some of the world’s richest countries or droughts and heatwaves in some of the poorest, the climate crisis hit hard in 2021. While it was good to see some progress made at the 26th Conference of Parties (CoP26) to the United Nations Framework Convention on Climate Change summit, it is clear that the world is not on track to ensure a safe and prosperous world.”

The human cost

Other extreme weather event were Parana river drought (Argentina, Paraguay, Brazil), South Sudan floods, Lake Chad crisis (Nigeria, Niger, Chad, Cameroon), Pacific Northwest heatwave (US, Canada) and East Africa drought (Kenya, Ethiopia, Somalia).

South Sudan experienced terrible floods, which affected more than 850,000 people, affecting 33 out of 78 counties. These people were reported as affected by flooding in areas along the Nile and Lol rivers and in Sudd marshlands since May. 

At the same time, East Africa continues to be ravaged by drought. The region was hit by an 18-month drought caused by El Niño and higher temperatures linked to climate change. 

Now, the drought situation has turned catastrophic, causing crops to fail and cattle to die. In addition, the lack of clean water increases the threat of cholera and other diseases.

The report also highlighted slow-developing crises such as the drought in the Chad Basin that has seen Lake Chad shrink by 90 per cent since the 1970s and threatens the lives and livelihoods of more than 17 million people in the region.

The drought in Parana river in Latin America pushed the water levels of the river to its lowest in 77 years and impacted lives and livelihoods in Brazil, Argentina and Paraguay.

These extreme weather events have caused severe human suffering from food insecurity, drought and extreme weather events, causing mass displacements and loss of life, in addition to financial cost.

The report recommended that countries urgently cut greenhouse gas emissions; richer countries need to provide more funding to support vulnerable communities living in poorer countries in tackling these disasters. 

The report also called for setting up a fund to specifically address the loss and damage caused by climate change by the end of CoP27.

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