Storm damage claims increase insured and uninsured losses by two-thirds

Combined, global costs resulting from catastrophic storm damage may show an increase of two-thirds by the 2080s, according to the Association of British Insurers (ABI).

The new report, “Financial Risks of Climate Change,” provides a global analysis of the projected climate-change trends of hurricanes, typhoons and windstorms. The potential effects of such changes may increase insured and uninsured annual losses to $27 billion by the 2080s.

According to ABI, it will only take small increases in hurricane, typhoon and windstorm intensity to heighten the severity of damage costs incurred. Reasonably, extreme storms will likely cause extensive destruction. As the cost of capital required to cover damages increases the volatility of the worldwide insurance market will also increase.

Behind the increase are high-emissions, which indicates a twofold increase in carbon dioxide levels, which result in weather changes that could boost insurers’ capital requirements for U.S. hurricanes by more than 90% and for Japanese typhoons by more than 80%.

ABI says the economic impact of climate change can be decreased if governments implement initiatives to reduce carbon emissions, improve flood defenses and strengthen building codes.