Flood losses top $32b in OECD countries as insurance fails to keep pace
Report shows 32% of flood losses in OECD member countries were insured from 2000 to 2024.
Only 32% of flood-related economic losses across Organisation for Economic Co-operation and Development (OECD) member countries were insured between 2000 and 2024.
The OECD said average annual economic losses from floods in member countries reached $32b between 2020 and 2024. It added that average annual wildfire losses rose by 360% in 2015 to 2024 compared with 2000 to 2014.
It found that in 24 out of 38 OECD countries, less than half of natural hazard losses since 2000 were insured, highlighting a persistent gap in financial protection.
The OECD said insurance coverage for natural hazard risks is generally available, but take-up remains relatively low across many member and accession countries.
It noted that households, businesses, and governments face exposure to unprotected losses from natural hazards, cyber attacks, and infectious disease outbreaks.
It added that whilst insurance coverage for most cyber risks exists, insurers often apply exclusions for events that could produce large correlated losses, and coverage for revenue losses linked to infectious disease outbreaks similar to COVID-19 remains broadly unavailable.
The OECD said rising wildfire risk is being driven by development in wildland–urban interface areas and weather conditions more conducive to fire ignition and spread, contributing to challenges in accessing affordable property insurance in some regions.
It noted that some jurisdictions have introduced or expanded residual insurance schemes and public–private insurance programmes to improve coverage availability, whilst others require insurers to offer premium discounts to encourage risk reduction.
Increasing flood hazard, continued development in flood-exposed areas, and low insurance coverage have also driven higher uninsured losses from floods, it said.
Some countries have established public–private insurance programmes to improve affordability and reduce public sector exposure.
The OECD added that governments should identify high-impact risks affecting large populations and assess whether financial protection is adequate, using public–private insurance schemes or public compensation mechanisms where necessary.
Over the longer term, investment in wildfire risk reduction and adaptation is seen as a sustainable way to improve insurance affordability.
The findings are from the OECD report Financial Protection Against Catastrophic Risks: Floods, Fires and Other Major Risks, which examines insurance coverage for natural hazards, cyber risks, and infectious disease outbreaks, and the role of governments in strengthening financial resilience.
