The recent severe thunderstorms that struck southern Brazil will result in major economic losses for the country, according to analysis from Gallagher Re
Severe thunderstorms struck the region on Nov. 7, resulting in widespread damage across Paraná, Santa Catarina, and Rio Grande do Sul. Local officials reported seven deaths and hundreds of injuries throughout the affected states.
Authorities in Rio Bonito do Iguaçu estimate that between 80% and 90% of buildings in the urban zone were damaged. More than 1,000 residents were displaced, and the municipality, which has a population of approximately 14,000, declared a state of calamity. An initial BRL50 million was released for reconstruction efforts.
Agribusiness, commercial properties, power networks, and other infrastructure sustained notable losses. Early reports indicated that at least eight tornadoes touched down in the region, with Rio Bonito do Iguaçu suffering the most extensive destruction.
Gallagher Re’s preliminary scenario-based analysis estimates residential economic losses at about BRL300 million, based on approximately 3,500 affected homes, including 640 that were fully destroyed and the remainder requiring major repairs.
These storms are part of a broader pattern of escalating catastrophe losses in Brazil. Insured losses from natural catastrophes in the country have increased fivefold in recent years, with the average insured loss rising from US$175 million between 2000 and 2019 to US$908 million for the 2020 to 2024 period.
This surge has been driven primarily by severe droughts and floods, reflecting how extreme weather events are becoming more frequent and severe in the region.
Despite the increase in insured losses, a significant protection gap remains. Catastrophic flooding in Rio Grande do Sul led to US$15 billion in economic losses, but only US$1.5 billion was insured, leaving a 90% protection gap. This gap is also evident in smaller municipalities like Rio Bonito do Iguaçu, where insurance penetration is low and most reconstruction costs fall on local communities and governments.
Gallagher Re estimates that the total economic loss from the recent tornadoes could range from BRL450 million to BRL600 million, with insured losses likely to represent only 10% to 20% of that amount. The firm notes that climate change, rapid urbanization, and coastal migration are contributing to the changing frequency and severity of catastrophes in Brazil, raising both costs and risks for communities.
