A Firm Foundation: How Insurance Supports the Economy

Defraying the economic costs of disasters

The insurance industry plays a vital role in helping individuals and businesses prepare for and recover from the potentially devastating effects of a disaster such as a catastrophic hurricane, tornado or wildfire.

Individually, insurers are taking steps to mitigate damage from extreme weather, and many sponsor programs for their customers to fortify their homes and sometimes offer premium discounts for certain features, such as fire-resistive construction. To help homeowners following a loss, many also offer ordinance or law coverage, which covers any increased costs a homeowner incurs for having to bring a building up to municipal code or ordinances following a covered loss. Insurers also are working together to help build resilience in the United States. Many of them fund the Insurance Institute for Building and Home Safety, dedicated to reducing and preventing losses that disrupt the lives of millions of home and business owners each year.

Natural Catastrophe Losses In The United States By Peril, 2022 (1)

($ millions)

Peril Number of events Fatalities Economic losses (2) Insured losses (3)
Tropical cyclone 3 157 $96,097 $53,203
Severe convective storm 62 49 37,232 29,306
Wildfire, drought, heatwave 26 65 18,093 8,902
Winter storm 13 123 6,223 4,128
Flooding 15 72 7,234 3,346
Total 119 ~466 $164,879  $98,885 

(1) Natural disasters that cause at least $25 million in insured losses; or 10 deaths; or 50 people injured; or 2,000 filed claims or homes and structures damaged. Includes Puerto Rico and the U.S. Virgin Islands.
(2) Includes any direct physical damage or direct net loss business interruption costs.
(3) Includes losses sustained by private insurers and government-sponsored programs such as the National Flood Insurance Program. Subject to change as loss estimates are further developed. As of January 2023.

~ =Approximately.

Source: Aon.

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