China endured around US$25 billion of losses from floods – the world’s second worst after Europe – last year, but only a tenth was insured, according to Swiss Re Institute. The lion’s share was attributed to extreme rainstorms in Henan province last July, which saw some US$19 billion of economic losses, where US$2.3 billion was covered, said the research unit of Swiss Re, one of the world’s biggest reinsurers. Henan floods to trigger record insurance claims as thousands of cars, property damaged Only Europe suffered more, recording over US$41.8 billion of flood-related losses when extreme rainstorms hit Germany and neighbouring nations in July, data from the Zurich-based firm’s latest research report on natural catastrophes showed. Some 32.5 per cent of the losses were covered. Asia has historically been the most flood-loss hit and underinsured region globally. Last year, just 10.6 per cent of US$31.1 billion of flood losses were protected. That has slightly improved from the 7 per cent average between 2011 and 2020, but still trailed well behind 34 per cent in Europe. “It is clear today that climate change will be the fundamental economic challenge of our time,” said John Zhu, the institute’s chief economist for Asia. “With climate change set to inflict heavy economic costs, infrastructure investments including flood defences can pay off substantially over the long run.” Under the most negative “business as usual” scenario, climate change will cost Asia more than a quarter of its gross domestic product by 2050, Swiss Re estimated. Last year, the world witnessed over 50 major flood events, which claimed over 2,300 lives and caused US$82 billion of economic losses, it noted. Since the 1950s, the frequency and intensity of heavy precipitation events have increased over most of the world’s land area where sufficient data has been collected, the United Nation’s Inter-governmental Panel on Climate Change (IPCC) said in a report last September. Human-induced climate change was “likely the main driver”. Even if global warming is contained at 1.5 degrees Celsius by 2100 from pre-industrial levels, heavy rainfall and associated flooding are projected to intensify and become more frequent in most regions in Africa and Asia, the IPCC said. Human activities have already caused an average temperature rise of 1.1 degrees since 1850. Global Top Inland Flood Events in 2021 Month Location Fatalities Economic Losses (US$ bil) Insured Losses (US$ bil) Jul Western and Central Europe 227 41 13 Jul Henan, China 302 19 2.3 Summer China (excluding Henan) 103 5.8 0.1 Nov Southwestern Canada 6 3.4 0.6 Summer India 729 2.3 n/a Mar New South Wales, Australia 2 1.1 0.4 All other flood events 1,157 10.2 3.8 TOTAL 2,580 82 20 Source: Swiss Re Institute Insured flood losses globally amounted to around US$20 billion last year, compared with an average of US$8 billion in the decade to 2020, US$4 billion in the decade to 2010 and US$3 billion in the 10 years to 2000, according to Swiss Re. “Scientific findings are unambiguous: global climate change is intensifying the hydrological cycle and making extreme events like floods more likely,” it said. “A warmer climate increases the amount and intensity of rainfall and shifts precipitation patterns.” Growing populations, rapid urban development and the accumulation of economic wealth in disaster-prone areas have also contributed to the growing catastrophe losses. Floods were the world’s top peril, affecting nearly a third of the population, and losses have risen at a faster pace than economic output globally, Swiss Re noted. Rival Munich Re has also warned of the role climate change may have played in rising losses from natural disasters. Losses grew to US$280 billion last year from US$210 billion in 2020 and US$166 billion in 2019, it said in a report in January. Only around US$120 billion of last year’s losses – mostly weather related – were insured, Munich Re noted, which was the second-costliest ever for the insurance industry after US$146 billion in 2017. “Even though events cannot automatically be attributed to climate change, analysis of the changes over decades provides plausible indications of a connection with the warming of the atmosphere and the oceans,” said Ernst Rauch, head of climate solutions at Munich Re. “Adapting to increasing risks due to climate change will be a challenge.”