Climate Change Report: Urgent Adaptation Measures Needed to Stem Rising Economic Losses, Swiss Re Institute Finds

Climate Change Report: Urgent Adaptation Measures Needed to Stem Rising Economic Losses, Swiss Re Institute Finds Copyright: Swiss Re Institute

(IN BRIEF) Swiss Re Institute’s latest analysis reveals that climate change is poised to escalate economic losses globally due to severe weather events. The report highlights the vulnerability of countries like the Philippines and the United States, which face significant economic losses equivalent to 3% and 0.4% of GDP, respectively. Urgent adaptation measures are needed to mitigate these risks, with the insurance industry playing a crucial role in supporting resilience-building efforts. The report emphasizes the importance of proactive measures, such as stringent building codes and enhanced flood protection, to reduce future losses and safeguard economies against evolving climate risks.

(PRESS RELEASE) ZURICH, 28-Feb-2023 — /EuropaWire/ —  Swiss Re (SWX: SREN), one of the world’s leading reinsurer, unveils a stark assessment from Swiss Re Institute highlighting the looming threat of climate change exacerbating economic losses worldwide due to weather-related perils. With an annual estimated global economic toll of USD 200 billion, countries like the Philippines and the United States stand particularly vulnerable, facing significant losses equivalent to 3% and 0.4% of GDP, respectively.

Jérôme Jean Haegeli, Swiss Re’s Group Chief Economist, emphasized the urgent need for adaptation measures to mitigate these escalating risks. “Climate change is leading to more severe weather events, resulting in increasing impact on economies. Therefore, it becomes even more crucial to take adaptation measures. Risk reduction through adaptation fosters insurability. The insurance industry is ready to play an important role by catalysing investments in adaptation, directly as a long-term investor and indirectly through underwriting climate-supportive projects and sharing risk knowledge. The more accurately climate change risks are priced, the greater the chances that necessary investments will actually be made,” Haegeli stated.

Swiss Re Institute’s latest report, “Changing climates: the heat is (still) on,” combines data from the Intergovernmental Panel on Climate Change (IPCC) with economic loss estimates to project the direct economic consequences of intensifying weather perils due to climate change. The findings underscore the urgent need for proactive measures to bridge the protection gap and enhance resilience against evolving climate risks.

Among the key insights:

• The Philippines tops the list of most economically impacted countries, with annual losses amounting to 3% of GDP and a high probability of hazard intensification.
• The United States ranks second, facing the highest absolute economic losses globally (USD 97 billion), primarily driven by tropical cyclones.
• Fast-growing Asian economies, including Thailand, China, India, and the Philippines, are identified as particularly vulnerable due to sizable insurance protection gaps and lagging adaptation measures.

Floods are projected to intensify globally, while tropical cyclones remain the primary driver of economic losses in the US and East and Southeast Asia. The report underscores the critical importance of proactive adaptation measures, such as stringent building codes and enhanced flood protection, in reducing future losses and safeguarding economies.

Table: Top Ten Countries Most Exposed to Weather Perils as of Today

1. Philippines – 3.00% of GDP
2. US – 0.38% of GDP
3. Thailand – 0.36% of GDP
4. Austria – 0.25% of GDP
5. China – 0.22% of GDP
6. Taiwan – 0.21% of GDP
7. India – 0.20% of GDP
8. Australia – 0.19% of GDP
9. Switzerland – 0.19% of GDP
10. Japan – 0.18% of GDP

As-of-today probabilistic economic losses as a percentage of GDP from the four major weather-peril events, by country, in 2022. Note: These are just the lower bound of potential economic losses, as the study does not cover all weather perils (eg heatwaves) and account for property losses only. And, as changing climates fuel weather-event intensity, loss potential will likely rise. Source: Swiss Re Institute, 2024

How to order this study:

The English version of the SRI report “Changing climates: the heat is (still) on”, is available in electronic format. You can download it here.

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Disclaimer

Although all the information discussed herein was taken from reliable sources, Swiss Re does not accept any responsibility for the accuracy or comprehensiveness of the information given or forward-looking statements made. The information provided and forward-looking statements made are for informational purposes only and in no way constitute or should be taken to reflect Swiss Re’s position, in particular in relation to any ongoing or future dispute. In no event shall Swiss Re be liable for any financial or consequential loss or damage arising in connection with the use of this information and readers are cautioned not to place undue reliance on forward-looking statements. Swiss Re undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.

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SOURCE: Swiss Re