Uninsured climate losses could hit $41.4t: Moody’s

About 2.7 billion people lived in areas exposed to flooding risks as of 2020.

Uninsured losses from natural disasters and rising sea levels could cost the global economy up to $41.4t over the next two decades.

According to a new report by Moody’s, it warned that a widening "insurance protection gap"—the shortfall between total economic damage and what insurance companies actually pay out—now poses a systemic risk to global stability. 

Because these uninsured losses do not vanish, the financial burden is increasingly shifted onto governments, businesses, and households, directly threatening long-term economic growth and development.

Moody's data reveals that this protection gap is widest in developing economies, where insurance take-up is traditionally lower. 

The risk in these regions is accelerating because rapid economic growth is creating higher-value assets faster than insurance coverage can keep pace.

The disparity is particularly stark when comparing regions. In the Asia-Pacific area, insurance covers an average of just 0.83% of gross domestic product. 

By contrast, the average across G7 nations stands nearly three times higher, at 2.38% of gross domestic product.

The financial risk from extreme weather is further compounded by rapid population growth in vulnerable areas. 

Moody’s analysis shows a significant rise in the number of people moving into flood zones. As of 2020, approximately 2.7 billion people—or roughly one in three individuals globally—lived in areas actively exposed to flooding risks.