According to Swiss Re, a leading reinsurance company based in Zurich, natural disasters caused $135 billion in economic losses globally in the first half (H1) of 2025, up from $123 billion in the same period in 2024.

Key Highlights of the Report

• Record Wildfire Losses in the USA: The Los Angeles wildfires in January 2025 caused an estimated $40 billion in insured losses — the largest-ever insured wildfire loss event globally.
  • Causes include strong winds, lack of rainfall, and high-density residential areas with high-value assets.
  • Wildfire-related losses now make up 7% of all natural catastrophe claims, up from just 1% before 2015.
• Severe Thunderstorms: Insured losses from severe thunderstorms reached $31 billion in H1 2025.
• Hurricane Season Warning: Historically, the second half of the year sees higher losses due to the North Atlantic hurricane season.
  • If trends continue, total global insured losses in 2025 could exceed Swiss Re’s projection of $150 billion.
• Myanmar Earthquake: A major earthquake in March 2025 affected Myanmar, with tremors felt in Thailand, India, and China.
  • In Thailand alone, insured losses were estimated at $1.5 billion.
• Man-made Disasters: Industrial accidents and other man-made events caused $8 billion in economic losses, of which $7 billion were insured.
  • Insurance and Risk Trends: Out of the $135 billion in natural disaster losses, $80 billion was insured, nearly double the 10-year average (adjusted to 2025 prices).
• Actions Required:
  • Mitigation and adaptation are the most effective ways to reduce future losses.
  • Flood protection infrastructure (dykes, dams, gates) can be up to 10 times more cost-effective than rebuilding after disasters.
  • Emphasis on building resilience through climate-smart planning, early warning systems, and land-use regulations.

India’s Vulnerability to Natural Catastrophes

• Geographical Exposure:
  • Himalayan Belt: Prone to earthquakes and landslides due to tectonic activity.
  • Coastal Regions: Vulnerable to cyclones, storm surges, and tsunamis, especially on the east coast.
  • North and Northeast India: Witness frequent floods due to river overflows, glacial lake outbursts, and monsoon extremes.
  • Western and Southern India: Often affected by droughts and heatwaves.
• Climatic and Seasonal Trends:
  • Monsoon variability is increasing due to climate change, causing flash floods in places like Uttarakhand and Himachal Pradesh and deficient rainfall in rain-fed agricultural zones.

Economic Impact of Natural Disasters in India

• Direct Economic Losses: Estimated at 2–3% of GDP annually due to infrastructure damage, crop losses, and livelihood disruption (World Bank).
  • Example: Cyclone Amphan (2020) alone caused estimated damages of $13 billion in West Bengal and Odisha.
• Sectoral Impacts:
  • Agriculture: Highly climate-sensitive; frequent droughts and unseasonal rains destroy crops, impacting food security and farmer incomes.
  • Infrastructure: Roads, railways, and power grids face frequent disruption; rebuilding diverts critical public investment.
  • Urban Economy: Flooding in metros like Mumbai and Chennai severely disrupts economic productivity.
• Insurance Penetration:
• • Very low: Less than 1% of disaster losses are insured in India (UNDRR), increasing fiscal burden on government post-disaster relief and rehabilitation.
  • Long-Term Developmental Loss: Natural disasters exacerbate poverty, displacement, and health risks, reversing years of development gains—especially in disaster-prone states like Bihar, Assam, and Odisha.

Disaster Risk Reduction (DRR) and Economic Preparedness:

• Policy Framework:
  • Disaster Management Act, 2005: Mandates creation of NDMA and SDMAs for institutional preparedness.
  • National Disaster Management Plan (NDMP): Integrates risk mitigation, early warning, and climate resilience into national planning.
• Early Warning Systems: 
  • IMD and ISRO have developed satellite-based cyclone and flood prediction systems.
  • Mobile-based alerts now widely used in cyclone-prone areas (e.g., Fani, 2019).
• Mitigation Programs:
  • National Cyclone Risk Mitigation Project (NCRMP)
  • Faster implementation of Smart Cities Mission and urban flood resilience infrastructure
  • Emphasis on nature-based solutions: mangroves, watershed management, green buffers
• Disaster Risk Financing:
  • State and National Disaster Response Funds (SDRF/NDRF) provide ex-post relief.
  • Push for risk-transfer mechanisms like:
    • Catastrophe bonds
    • Parametric insurance for farmers (Pradhan Mantri Fasal Bima Yojana)
    • Greater role of private insurers

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