ZURICH: Flooding caused $82 billion of damage worldwide in 2021, Swiss reinsurance giant Swiss Re announced Wednesday, warning that the amount of uninsured losses was only likely to grow with climate change.

The Zurich-based group, which acts as an insurer for insurers, said last year’s floods in Germany and its neighbours generated economic losses of more than $40 billion — only $13 billion of which were covered by insurance.

The floods were the most costly natural disaster ever recorded in Europe, Swiss Re said in its report on the cost of natural and man-made disasters in 2021.

But due to climate change and increasing urbanisation, Swiss Re’s research institute expects economic losses from flooding to increase.

“Floods affect nearly a third of the world population, more than any other peril,” Martin Bertogg, head of catastrophe perils at Swiss Re, said in a statement.

“In 2021 alone, we witnessed more than 50 severe flood events across the world.”

However, a full 75 percent of flood risks are still not insured, the group said.

“Given the scale of devastation, flood risk deserves the same attention and risk assessment rigour as primary perils such as hurricanes,” said Bertogg.

Last year was marked by a range of devastating floods, notably in China, India, the Philippines, and the United States in the wake of Hurricane Ida.

Insurance gap

Of the $82 billion of flooding damage last year, just over $20 billion was covered by insurers, emphasising the gap in flood risk protection. The gap is the biggest in Asia, where only seven percent of economic losses due to floods were covered by insurance.

That compares to 34 percent in Europe, Swiss Re said. Floods were only one among a range of natural catastrophes to hit last year, Swiss Re said. In total, natural disasters, including storms, earthquakes, forest fires and tsunamis, caused $270 billion of damage in 2021, with $111 billion of that covered by insurers, Swiss Re said.

Man-made disasters, including fires, explosions, shipping and rail disasters, mining accidents and collapsed buildings, meanwhile carried a price tag of $10 billion, $8 billion of which was insured. War and war-like events are not included in that number.

Swiss Re pointed out that floods are considered secondary perils, as opposed to major catastrophes like hurricanes and earthquakes. But such secondary perils, which also include tornados, storms, hail and drought, are occurring with growing frequency, incurring swelling costs for insurers.

In 2021, so-called secondary peril events accounted for more than 70 percent of all insured losses. And for the first time, two such events — winter storm Uri in the US and devastating floods in central-western Europe in July — each caused losses of more than $10 billion, Swiss Re said.