Greater Insurability of Climate Risk is Key to Global Economic Resilience: Aon Catastrophe Report

Rhea-AI Summary

Aon's 2025 Climate and Catastrophe Insight report reveals global natural disasters caused $368 billion in economic losses in 2024, marking the ninth consecutive year exceeding $300 billion. Insurance covered $145 billion of these losses, leaving a significant 60% protection gap.

Hurricane Helene was 2024's costliest event, causing $75 billion in damages and 243 fatalities, while Hurricane Milton led to the largest insured loss at $20 billion. The U.S. accounted for 78% of global insured losses.

The report highlights increasing frequency and costs of weather-related events, with at least 54 global events causing losses above $1 billion. 2024 was recorded as the warmest year ever, with 20 countries reaching their highest temperatures. Despite the severe economic impact, improved warning systems and evacuation planning helped reduce casualties to 18,100, well below the 21st-century average of 72,400.

Positive

• Insurance coverage increased year-over-year, with insured losses reaching $145B (2023: $126B)
• Protection gap improved to 60% from 68% in 2023
• Improved warning systems and evacuation planning reduced casualties below the 21st-century average

Negative

• Global economic losses reached $368B, 14% above 21st-century average
• $223B in uninsured losses challenges recovery and resilience
• 78% of global insured losses concentrated in U.S. market, indicating high geographic risk concentration
• Increasing frequency of billion-dollar loss events (54 vs. average of 44)

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• Annual report reveals 60 percent of economic damage caused by catastrophes in 2024 was uninsured
• Insured losses reached $145 billion globally – the sixth costliest year on record

DUBLIN, Jan. 22, 2025 /PRNewswire/ -- Aon plc (NYSE: AON), a leading global professional services firm, today published its 2025 Climate and Catastrophe Insight report, which identifies global natural disaster and climate trends to quantify the risk and human impact of extreme weather events in 2024.

The report reveals global natural disaster events caused $368 billion (2023: $397 billion) in economic losses in 2024, driven by hurricanes and severe convective storms (SCS) in the U.S. This is 14 percent above the 21st-century average and the ninth consecutive year of losses exceeding $300 billion.

Greg Case, CEO of Aon, said: "The devastating events of 2024 underscore the significant economic toll of climate risk. Evidenced by the data in our report – and the tragic destruction in California at the beginning of 2025 – extreme weather remains a powerful force driving the complexity and volatility that businesses and communities face and emphasizes the urgent need for innovative solutions to address this growing challenge."

The Climate and Catastrophe Insight report points to several trends with natural catastrophe losses:

Weather-related events are becoming more frequent and costly. Global insurance losses in 2024 were 54 percent above the 21st-century average, covering $145 billion of the $368 billion in damages (2023: $126 billion). Even as insured losses far exceeded the average, the protection gap stood at 60 percent (2023: 68 percent), representing a significant financial headwind to communities, businesses and governments. Increases in population, wealth and overall exposure to natural hazards in high-risk areas continues to be a crucial component of growing disaster losses.

Hurricane Helene was the costliest global event in 2024. The hurricane made landfall in the U.S. in September and caused $75 billion of damages and 243 fatalities. Hurricane Milton in October was the costliest single global insured loss event, causing $20 billion in losses. These are major contributors to the fact that 78 percent of global insured losses were recorded in the U.S.

The steady growth of SCS losses reflects increasing population, exposure and wealth. There were at least 54 global events that each resulted in economic losses above $1 billion in 2024, which is above the average of 44. The increase in the number of billion-dollar events is largely driven by SCS in the U.S. Growing exposure to this peril increases the likelihood of billion-dollar disasters occurring, particularly as the U.S. continues to experience spatial growth of cities in areas regularly affected by SCS activity, such as Dallas, Houston or Denver.

In terms of climate, 2024 was the warmest year on record. Twenty countries and territories recorded their highest temperatures during a year which saw the end of 15 consecutive months of record global high temperatures in August.

Case added: "When it comes to climate risk, the stakes could not be higher. The $223 billion in uninsured losses in 2024 challenges the ability to rebuild, recover and create more resilience across the globe. Part of the solution requires investments in technology and analytics to model and price the risks and attract deeper capital pools that can see a potential return on investment to take on these risks. Capital will not go where it is not protected – and the events from 2024 should stimulate innovation across our industry to strengthen the global economy."

Aon's report also shows that with greater resilience and mitigation measures in place, global economies can reduce damage and loss of life. In 2024, 18,100 people lost their lives due to natural hazards, mostly from heatwaves and flooding globally. This was below the 21st-century average of 72,400 and could be attributed to improved warning systems, weather forecasts and evacuation planning, underscoring the value of reliable climate data, insights and analytics.

Andy Marcell, CEO of Risk Capital for Aon, said: "The insurance industry – and broader financial community – has the opportunity to bring new sources of capital to protect vulnerable communities and create greater economic resilience. The collaboration between various stakeholders will be crucial in developing public-private partnerships and innovative insurance products that offer a sustainable way of closing the protection gap."

The report reveals that Spain, Brazil, U.A.E. and Vietnam all recorded their costliest insurance events in 2024. The top 10 global economic loss events were as follows:

Top 10 Global Economic Loss Events in 2024

Date	Event	Location	Deaths	Economic Loss (2024 $ B)	Insured Loss (2024 $ B)
09/25 - 09/28	Hurricane Helene	United States, Mexico, Cuba	243	75.0	17.5
10/08 - 10/11	Hurricane Milton	United States, Mexico	35	35.0	20.0
01/01	Noto Earthquake	Japan	489	18.0	1.0
10/27 - 10/30	Valencia Floods	Spain	231	16.1	3.9
06/09 - 07/14	South, Central China Floods	China	470	15.7	0.4
09/01 - 09/09	Typhoon Yagi	China, Southeast Asia	816	12.9	0.7
07/01 - 07/11	Hurricane Beryl	United States, Caribbean, Canada	70	7.7	3.7
09/12 - 09/16	Central Europe Floods	Central Europe	29	7.5	2.1
01/01 - 12/31	Drought	United States	N/A	7.1	3.5
05/06 - 05/10	Severe Convective Storm	United States	6	6.6	5.2
All other events			~15,700	166.4	87.0
TOTALS			~18,100	368	145

Michal Lörinc, head of Catastrophe Insight at Aon, said: "Our understanding of natural hazards continues to evolve, but one trend is clear – we continue to see a greater number of large-scale disasters in terms of financial loss. Businesses and communities need to prepare their people, operations and properties using insights from the latest forecasting models, analytics and reliable climate data."

Aon's 2025 Climate and Catastrophe Insight report can be found at the following link: https://aon.io/4jsosa2

About Aon
Aon plc (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Through actionable analytic insight, globally integrated Risk Capital and Human Capital expertise, and locally relevant solutions, our colleagues provide clients in over 120 countries with the clarity and confidence to make better risk and people decisions that protect and grow their businesses.

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Aon UK Limited is authorised and regulated by the Financial Conduct Authority for the provision of regulated products and services in the UK. Registered in England and Wales. Registered number: 00210725. Registered Office: The Aon Centre, The Leadenhall Building, 122 Leadenhall Street, London EC3V 4AN. Tel: 020 7623 5500. FP #13161 has been approved until January 21^st, 2027, after which time the content should not be used or distributed.

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SOURCE Aon plc

FAQ

What were AON's reported global natural disaster losses for 2024?

According to AON's report, global natural disasters caused $368 billion in economic losses in 2024, with $145 billion covered by insurance, leaving a 60% protection gap.

What was the most expensive natural disaster in 2024 according to AON's report?

Hurricane Helene was the costliest global event in 2024, causing $75 billion in damages and 243 fatalities.

How many billion-dollar natural disaster events occurred in 2024 according to AON?

AON reported 54 global events that each resulted in economic losses above $1 billion in 2024, exceeding the average of 44 events.

What percentage of AON's reported global insured losses occurred in the United States in 2024?

78% of global insured losses were recorded in the United States in 2024.

How did AON's reported natural disaster casualties in 2024 compare to historical averages?

18,100 people lost their lives due to natural hazards in 2024, significantly below the 21st-century average of 72,400.