Relief from Disruptive Weather Events but Insurance Challenges Persist

After a string of disruptive events ranging from bushfires to earthquakes and floods in the preceding decade, 2024 was a notably quiescent year for natural catastrophes in Australia and New Zealand. This experience of economic and insured losses sitting well below the long-term average for the Pacific region is in stark contrast with the global picture, where economic losses from natural disasters in 2024 are estimated at AUD$562 billion, more than 10 percent above the long-term average since 2000.[1]

A Welcome Break in the Weather

When compared with recent years, 2024 has given the Pacific region a significant reprieve from catastrophic weather events. This has produced a dramatic fall in insured losses, bucking the longer-term trend for Australia and New Zealand. “If you look at 2022 in Australia, we had over AUD$8 billion of declared insured loss[2],” says Dr Tom Mortlock, Head of Climate Analytics, Asia Pacific. “Two years later in 2024, it has fallen to roughly half a billion across two events[3].”

In New Zealand, the year-on-year change is even more marked. “In New Zealand, there was AUD$3.6 billion plus in losses in 2023[4], and then in 2024, it was close to zero[5],” says James Knight, Head of Asia Pacific, View of Risk Advisory.

A contributing factor in this decline may have been unusually mild climate conditions. While the year began with an El Niño many feared would drive a spring and summer of bushfire events reminiscent of 2019 and 2020, it remained weak and eventually transitioned to neutral.

“The background climate state has been mainly neutral for everything over the past year,” says Dr Mortlock. “The 2024 El Niño Southern Oscillation (ENSO), plus other systems that act upon our region, like the Indian Ocean Dipole (IOD), were recorded as neutral overall.”

The absence of extreme weather is underscored by a calendar year free of declared Insurance Council of Australia (ICA) catastrophe (CAT) events. “For the first time since 1982, there has been no declared ICA CAT event in Australia,” says Dr Mortlock. This is consistent with a long-term decline in tropical cyclones making landfall that have long plagued Australia’s northern states and industries. “This is an anomalous trend compared to every other basin in the world,” says Dr Mortlock. “For most other basins, it is going up whereas here it is going down. This is a reminder that climate change is not unidirectional – it impacts different perils in different ways.”

Severe Convective Storms on Pause in the Pacific

Not only is the frequency of tropical cyclones declining locally, but the Pacific is also experiencing a pause on major loss causing severe convective storms (SCS). This stands in contrast with the global trend, with SCS perils now in the lead in the total number of events above AUD$1.5 billion in economic loss.[6]

“Globally, severe insured losses from SCS events are becoming more frequent as populated areas, their physical assets, and insurable value, continue to grow and be placed at risk,” says Knight. “We saw significant SCS activity in Australia between 2010 and 2020, and as a result, insured losses were high. Since 2020 though, it has all gone a bit quiet.” However, unlike the long term, gradual decline in Pacific tropical cyclones, the recent lull of SCS activity is highly unlikely to last.

Ongoing Risk Challenges: Valuations, Premiums and Underinsurance

Despite the break from major weather and catastrophe events, there continue to be challenges for insurers and policy holders in the Pacific. Following recent years of extreme weather, premiums continue to rise, even in the absence of recent large-scale disasters. “The local market is still reeling from the period 2019 through 2023,” says Dr Mortlock. “Insurance affordability is still an issue. Since 2022, premiums have risen across the market.[7] While the rate of increase is slowing down, this highlights that insurance affordability is not just about local losses and events. It is about reinsurance costs, rebuild costs and inflation.”

Inflation is also an important factor in the ongoing issue of underinsurance, with many policy holders not adequately covered for potential property damage or loss. “Underinsurance is common either because it can be too expensive to insure property to the full extent or because valuations haven’t kept pace with the true costs of repair or rebuild, given the higher inflation rates we’ve had for materials and the rising demand and costs for trades,” says Knight.

Heading into 2025, Australian companies can take advantage of this more favourable claims and loss experience through 2024 as leverage in negotiating renewals. At the same time, they should keep in mind that a single year of reduced activity won’t be a driving influence on premiums.

Is the Pacific Prepared for Future Catastrophes?

Returning to the global view on catastrophes and their impact, 2024 has brought renewed focus on disaster preparedness. “Valencia, Dubai and Germany all experienced very significant rainfall and subsequent flooding and Aon’s latest Climate and Catastrophe Insight report talks about differing preparedness levels,” says Knight. “These disparities in preparedness can lead to very different financial and human costs from any severe activity.”

In Australia, governments are gradually starting to invest more in disaster mitigation efforts. “In a previous report, the Productivity Commission found that 97% of all disaster funding is spent on cleanup, and only two to three percent on preparedness[8],” says Dr Mortlock. That balance has since been at least partially redressed with the Federal Government’s Disaster Ready Fund, which is making up to AUD$1 billion in funding available from 1 July 2023.[9]

While 2024 has been relatively quiet for extreme weather and natural disasters, policy holders in the Pacific should stay vigilant. Continuing to invest in risk mitigation, adaptation, insurance coverage, and preparedness will be critical in building resilience to limit and withstand economic losses coming from future catastrophes.

Download Aon’s 2025 Climate and Catastrophe Insight Report to learn more about the impact of global catastrophes and climate on workforce resilience, emerging technology and trade continuity, with insights on how organisations can accelerate adaptation, make better decisions to help protect people and property, and collaboratively build a more resilient future.

[1] Aon, 2025 Climate and Catastrophe Insight Report

[2] Aon, 2023 Weather, Climate and Catastrophe Insight

[3] Aon, 2025 Climate and Catastrophe Insight Report

[4] Aon, 2023 Weather, Climate and Catastrophe Insight

[5] Aon, 2025 Climate and Catastrophe Insight Report

[6] Aon, 2025 Climate and Catastrophe Insight Report

[7] Actuaries Institute, Home Insurance Affordability and Home Loans at Risk, August 2024

[8] Productivity Commission Inquiry Report, Natural Disaster Funding Arrangements, 1 May 2015

[9] National Emergency Management Agency, Disaster Ready Fund, accessed February 2025