Gallagher Re: 2023 begins with above-average global catastrophe losses
Devastating earthquakes in Turkey and Syria were the leading driver behind global catastrophe losses to start 2023.
Global economic damage from natural disasters in the first quarter of 2023 hit $77 billion – the highest Q1 total since 2011 – according to the new Natural Catastrophe Report from Gallagher Re.
The biggest driver of loss to start 2023 was an earthquake sequence in Turkey and Syria in February. This included a 7.8-magnitude earthquake on February 6 in southeastern Turkey, near the Syrian border, that was followed by a 7.5-magnitude aftershock a few hours later. Thousands of aftershocks continued across the region in the days that followed, including a 6.3-magnitude quake on February 20. Currently, 57,759 deaths have been attributed to these earthquakes that caused a likely $45 billion (USD) in damage.
The Turkish Catastrophe Insurance Pool (TCIP) reported that as of early April, it has received over 450,000 claims and paid around $900 million (USD) to insureds impacted by this humanitarian emergency.
“The Turkey earthquake sequence is a difficult reminder of the significant vulnerabilities that exist to life and property from seismic events,” Steve Bowen, chief science officer at Gallagher Re, said in a release. “As the private and public sectors work together to develop a more resilient and adaptive society to current and future climate change risk, it is imperative that all natural hazard types, and not just weather or climate perils, are considered in the planning discussions.”
Severe weather in the United States also contributed to the above-average losses. According to Gallagher’s report, severe convective storms during the month of March in the U.S. caused $13 billion in economic losses – setting a new record for the costliest Q1 on record for the peril, previously held by Q1 2017 ($12.6 billion).
The quarter concluded with a 16-state severe weather outbreak on March 31 and April 1 that spawned at least 142 confirmed tornadoes. These storms killed at least 33 people and were especially devastating to areas of Arkansas, Illinois, Iowa, Tennessee and Indiana. Gallagher Re attributes these extreme weather events to above-average global temperatures, as well as the transition from La Niña to El Niño.
“For the (re)insurance industry, El Niño brings a pivot in terms of physical loss and humanitarian impact potential around the world,” Bowen explained in the release. “Since El Niño correlates to warmer surface conditions, this allows for more volatility in weather patterns that can prompt floods to be more prolific and droughts to be more intense. This puts specific pressure on written agricultural insurance products or those in development. Additionally, an increased frequency potential of tropical cyclones in East Asia may bring higher regional catastrophe losses.”
Around $22 billion of these losses were covered by public or private insurance entities, Gallagher Re reports, which leaves a 72% ($55 billion) protection gap.