Economic losses from flooding topped $US42 billion ($59 billion) worldwide last year and have reached $US2 trillion ($2.8 trillion) since 2000, Aon says.

In a report released for Earth Day last week, the broker said flood has become an “increasingly impactful” natural hazard over the past three decades, and drought is emerging as a major secondary peril, accounting for $US13 billion ($18 billion) of economic losses last year.

“Climate variability is increasingly influencing insurers’ business models, and these natural catastrophe trends point to a more structurally complex risk landscape where traditional views of risk, based only on historical experience, are no longer sufficient,” head of climate risk advisory Liz Henderson said.

Aon’s Climate Risk Monitor projects US pluvial – or rainfall‑driven – flood risk could increase by about 12% under a medium‑emissions global heating scenario and about 19% under a high‑emissions scenario by mid‑century.

Last year, the US recorded 14 separate 24‑hour periods with rainfall amounts equivalent to a one-in-1000‑year flood. That was the highest count since 2002, and came alongside catastrophic flash flooding in central Texas and inundation in the Mississippi Valley.

Aon says its Climate and Catastrophe Insight report highlights the size of protection gaps and the importance of re-examining resilience strategies.

Only 2.6% of US residential structures were covered by National Flood Insurance Program policies in counties where NFIP payouts were received last year. The number of private home flood policies and the premium paid more than doubled between 2020 and 2024.

Aon public sector partnership MD Andy Neal says political uncertainty compounds the volatility of natural disasters.

“For policymakers, co-ordination between the public and private sectors will be increasingly important to expand coverage, invest in resilient infrastructure and use risk insights to inform planning decisions,” he said.