Welcome to the latest edition of WTW's Natural Catastrophe Review, a biannual publication that brings insights from our experts, including the WTW Research Network, to examine recent natural catastrophes, lessons learned and emerging trends.
This edition delves into the physical, vulnerability and socioeconomic factors that contributed to the largest natural catastrophes in the first half of 2024 (Figure 1). Offering a smarter way to risk, this report goes beyond the numbers to help you navigate the complex landscape of natural catastrophe and climate risk management.
For the second consecutive year, the U.S. experienced an above-average number of tornadoes, hailstorms and straight-line wind events from January to June, resulting in over US $30 billion in insurance claims. Severe flooding impacted multiple areas, including Brazil, East Africa, Dubai, Australia, China, the U.S. and Germany. A Mw7.5 earthquake struck Japan, while Taiwan experienced its strongest quake in 25 years, measuring Mw7.4. Marine heat waves triggered a global coral bleaching event, underscoring the importance of protecting “natural capital” ecosystems. Texas recorded its largest wildfire, burning 426,600 hectares. Meanwhile, severe drought in the Mediterranean exposed the vulnerability of food supply chains to climate risks.
In the second half of the year, the focus will shift to the North Atlantic hurricane season, predicted to be exceptionally active due to record-warm sea surface temperatures (SSTs) and the anticipated transition to La Niña (Section 4.1). Additionally, this report’s Outlook section explores the risk of solar storms as we approach the solar maximum (Section 4.2) and provides insights into how organizations can utilize climate risk reporting for strategic planning (Section 4.3).
In Section 3.1, WTW’s Scott St. George examines the fast start to the 2024 U.S. severe convective storm (SCS) season, which featured violent EF4 tornadoes in Oklahoma and Iowa as well as a derecho in Houston. This follows 2023, a year in which U.S. SCS insurance claims exceeded US $50 billion for the first time. The rising occurrence of “secondary” (or earnings) perils such as SCS, floods and wildfires has prompted insurers to intensify their efforts to better understand and manage these risks. Research plays a crucial role in analyzing these trends. For example, a study by Columbia University, in collaboration with WTW, has found that tornado outbreaks in parts of Alabama, Georgia, Missouri and Mississippi are now more than twice as frequent as they were in the early 1980s.
Flooding is another peril drawing increased attention due to escalating damages. This edition highlights flooding in Dubai (Section 3.3), Australia (Section 3.5), Brazil (Section 3.6) and East Africa (Section 3.8). Additionally, flooding resulted in major disruptions and substantial financial losses in China, Germany and the midwestern U.S. Climate scientists are increasingly linking extreme precipitation events to climate change, which enables the atmosphere to hold more moisture, resulting in heavier rainfall. For instance, researchers have found that human-induced climate change doubled the likelihood of the April to May 2024 flooding in Brazil.[1]
In early 2024, major earthquakes struck Japan and Taiwan. Improved resilience and preparedness measures significantly reduced human casualties and damage; however, some building and infrastructure failures still occurred. In Section 3.2, WTW’s Arash Nassirpour, Elide Pantoli and James Dalziel explain that in Japan, most failures were concentrated in areas prone to liquefaction, while in Taiwan, soft-story collapse was the primary issue. These problems highlight the ongoing need for comprehensive seismic risk assessments, retrofitting vulnerable structures, and updating construction practices and codes.
In Section 3.7, an article by WTW’s Neil Gunn and co-authors discusses the impact of a prolonged drought in the Mediterranean region on agricultural production, focusing on the olive industry. The drought, caused by meteorological and hydrological factors, led to impaired crop yields and a 2.5-fold increase in olive oil prices, highlighting the vulnerability of food supply chains to climatic disruptions. With climate change predicted to increase drought risk in many parts of the world, businesses are advised to adopt effective strategies to assess and mitigate potential drought-related impacts on their operations and supply chains.
Several events in 2024 have demonstrated the importance of resilient infrastructure amid rising climate-related catastrophes. In Section 3.4, an article by Chloe Campo and Guy Schumann from RSS-Hydro highlights how Texas’ aging and poorly managed electricity infrastructure ignited the Panhandle fires. In Brazil, catastrophic flooding was likely exacerbated by the inadequate maintenance of flood protection systems. And flooding in Dubai showcased the significant impact natural catastrophes can have on airport infrastructure.
Businesses can manage these systemic risks through comprehensive risk assessments and such tools as WTW’s Airport Risk Index. Also effective are storylines — physically consistent narratives of plausible future events. In Section 3.5, WTW’s Ben Rabb, Anna Haworth and Jessica Boyd discuss how storylines can help businesses understand and navigate complex risks, such as infrastructure disruptions, in the face of climate change.
June 2023 to June 2024 brought 13 consecutive months of record-breaking global average temperatures with each month surpassing the previous records for that time of year (Figure 2). According to the Copernicus Climate Change Service, the global average temperature during the past 12 months (July 2023-June 2024) was 1.6°C above the 1850-1900 pre-industrial average. Additionally, global SSTs set records for 15 consecutive months up to June 2024. In Section 3.9, WTW’s Sarah Conway and Jamie Pollard detail how high SSTs have led to a global coral bleaching event and discuss the role of parametric insurance in protecting these vulnerable ecosystems.
Data source: Copernicus Climate Change Service via Climate Reanalyzer.
The El Niño-Southern Oscillation (ENSO) is a climate pattern characterized by periodic fluctuations in Pacific Ocean SSTs. El Niño features warmer SSTs in the central and eastern tropical Pacific, while La Niña brings cooler waters. ENSO affects global weather patterns and contributed to record-breaking global temperatures in 2023.[2] However, by early 2024, El Niño conditions waned, transitioning to the current ENSO-neutral state.
Forecasts indicate a 65% chance of La Niña developing in July to September and an 85% chance of it persisting into November to January.[3] La Niña typically leads to more hurricanes in the North Atlantic by creating calmer upper-level winds that allow storms to form more easily. Coupled with record-warm SSTs, this has led to predictions of an exceptionally active 2024 North Atlantic hurricane season. In Section 4.1, James Done from the National Center for Atmospheric Research discusses these forecasts and their implications.
