Australia has a natural catastrophe protection gap of 38%, larger than the UK and Switzerland, Swiss Re says, while warning that flood risk “deserves the same attention and risk assessment rigour” as hurricanes.

The gap – the difference between economic losses and insured losses resulting from catastrophes – compares with 25 % in the UK and 26 % in Switzerland. It is smaller than gaps of 44% in the US, 45% in Canada, 49% in France, 58% in Germany, 89% in Italy, 74% in Japan and 95% in China.

"A key step is to increase awareness and knowledge of the risks from natural catastrophes,” Swiss Re said. “Climate change will exacerbate severe weather events. As the climate continues to warm, Australia is expected to suffer more hot days, more intense rainfall, and a continued rise in sea levels.”

Swiss Re's new infographic risk profile says Australia is one of the few countries exposed to all natural hazards – where "bushfires can ravage one region while floods cover another”. From 2011-2021, more than a third of Australia's natural catastrophes were not covered by insurance, resulting in a protection gap of $US14.5 billion ($19.32 billion), or 38%.

The largest losses resulted from the 2011 Brisbane floods in southeast Queensland.

“Just over a decade later, southeast Queensland and New South Wales were again hit by torrential rain in late February 2022 that caused some of the worst flooding ever,” it said. “The country is already experiencing the effects of climate change with drier conditions in the southeast and southwest, and wetter seasons across northern Australia.”

Natural catastrophes triggered $US111 billion ($148) in insured losses globally last year, the latest Sigma report says. Total economic losses from disasters across the globe were an estimated $US280 billion ($373 billion), up from $US217 billion ($289 billion) in 2020. Australia clocked up $US5 billion ($6.66 billion) last year.

Sigma records economic losses from floods amounted to 23% of the total in the past decade, the second highest after tropical cyclones. Global economic losses from floods came to $US82 billion ($109 billion) in 2021, yet insured losses stood at only around $US20 billion, according to Sigma’s "The flood gates are open” report.

“We witnessed more than 50 severe flood events across the world,” said Martin Bertogg, Head of Catastrophe Perils at Swiss Re. “Flood risk deserves the same attention and risk assessment rigour as primary perils such as hurricanes.”

Flood losses will keep increasing with climate change and urbanisation, with devastating floods in Europe, China, the US and other parts of the world last year, Sigma says.

“Already in the first quarter of 2022, major flooding in eastern Australia has caused widespread devastation and substantial insured losses.”