Swiss Re: Global insured NAT CAT losses totaled $108B in 2023
In 2023, global insured catastrophe losses exceed $100B for the fourth consecutive year, according to Swiss Re Institute.
Natural catastrophes caused $108 billion in global insured losses in 2023 — making it the fourth consecutive year that global NAT CAT losses exceeded $100 billion, according to recent findings from the Swiss Re Institute.
Severe convective storms (SCS) accounted for a record $64 billion of these losses. The United States took the brunt of SCS damage with 85% of these losses originating there. However, Europe has experienced the fastest growth in SCS-related insured losses, exceeding $5 billion in damages in each of the last three years. Hailstones are the biggest contributor to SCS losses; causing 50-80% of this damage.
A catastrophic earthquake that struck Turkey and Syria in February 2023 caused estimated insured losses of $6.2 billion, making it the costliest global disaster of the year. Overall, there were 142 insured natural catastrophe events recorded in 2023 — a new record. At least 30 of these events were considered “medium severity,” and resulted in losses between $1 billion and $5 billion each. This is significantly higher than the ten-year average of 17 medium-severity disasters per year.
“Even without a historic storm on the scale of Hurricane Ian, which hit Florida the year before, global natural catastrophe losses in 2023 were severe. This reconfirms the 30-year loss trend that’s been driven by the accumulation of assets in regions vulnerable to natural catastrophes,” Jérôme Jean Haegeli, Swiss Re’s group chief economist, said in a release. “In the future, however, we must consider something more: climate-related hazard intensification. Fiercer storms and bigger floods fueled by a warming planet are due to contribute more to losses. This demonstrates how urgent the need for action is, especially when taking into account structurally higher inflation that has caused post-disaster costs to soar.”
The rise in SCS-related losses has largely been driven by increased exposures from economic and population growth, urbanization and wealth accumulation; and all of these issues have been exacerbated by climate change. The increased adoption of alternative energy sources like rooftop solar energy systems has also contributed to increased exposure vulnerability in severe weather.
Swiss Re suggests that the first step toward cutting insured NAT CAT losses is to reduce loss potential with measures like enforcing building codes, building flood protection barriers and discouraging settlement in areas that are prone to natural disasters. In addition, they recommend a collaboration between primary insurers, insurance associations and the public sector that will enable data exchange for the purpose of risk mitigation.
“As weather hazards intensify due to climate change, risk assessment and insurance premiums need to keep up with the fast-evolving risk landscape. Looking ahead, we must focus on reducing the loss potential. 2023 was the hottest year on record, and the start to 2024 is following suit,” Moses Ojeisekhoba, Swiss Re’s CEO, global clients & solutions, said in a release. “Keeping property insurance sustainable and affordable requires a concerted effort by the private industry, the public sector and broader society — not just to mitigate climate risks, but to adapt to a world of more intense weather.”