One of the world's largest insurance companies has warned businesses that they simply can't look away from the financial impacts of extreme weather much longer.
What's happening?
Swiss Re posted a press release that detailed economic losses as a result of a warming climate are set to increase, and the United States and the Philippines are among the nations that will be most affected.
The insurer's analysis of 36 countries found those to be the two areas that are "most economically exposed" as hazards from extreme weather become more pronounced.
While the "four weather perils" described by Swiss Re — floods, tropical cyclones, winter storms in Europe, and severe thunderstorms — are nothing new, rising global temperatures are making these events longer, stronger, more common, and deadlier.
In the U.S., Swiss Re noted there is a growing risk of tropical cyclones. As it stands, the country's annual economic loss as a result of extreme weather is estimated to be 0.38% of its annual gross domestic product, or around $97 billion.
"Climate change is leading to more severe weather events, resulting in increasing impact on economies," Swiss Re's group chief economist Jérôme Jean Haegeli said. "Therefore, it becomes even more crucial to take adaptation measures. Risk reduction through adaptation fosters insurability. … The more accurately climate change risks are priced, the greater the chances that necessary investments will actually be made."
Why is this concerning?
The United States dealt with a number of extreme weather conditions in 2024, including devastating hurricanes and wildfires.
According to AccuWeather, cited by Bloomberg, the short- and long-term total economic impacts of Hurricanes Helene and Milton could reach $400 billion. In North Carolina, repairs for physical damage to buildings, homes, and infrastructure could hit $53 billion.
Meanwhile, a 2023 study from economic software and analysis company IMPLAN, cited by Forbes, found that wildfires cost the United States $89.6 billion in lost output.
As the NOAA National Centers for Environmental Information pointed out, the 10 warmest years in 174 years of record-keeping all occurred in the last decade, and 2024 is on track to be the warmest year on record.
That suggests there is no end in sight to a continually warming climate, and with that, we should all expect worse extreme weather events. Businesses have been served a reminder that climate inaction could harm economic gains, and changes need to be made to mitigate those risks.
What can be done to minimize economic losses?
It's getting harder and harder to find financial protection from extreme weather for business properties, with many insurance companies increasing the cost of coverage or pulling their offering entirely.
That's why prevention is becoming more important. Gene Kennedy from Savannah Trims, for example, spoke to The Cool Down about his company's flood protection barriers, which could save businesses thousands of dollars on repairing damage.
But what businesses really need to do to reduce future risks is to implement pollution-reducing practices. This can start with switching gas-guzzling business vehicles to electric alternatives or by encouraging employees to cycle to work.
This could also involve analyzing the materials used in products and packaging and opting for greener alternatives or being more mindful of energy usage on business premises.
These actions will not only save money and come at a lower negative environmental impact, but responsible climate actions can also encourage customers to use a business's services.
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