The first half of 2024 was marked by the frequency of major convective storms in key insurance markets, according to preliminary reports recently published by Gallagher Re and Aon. 

Gallagher Re provisionally estimates economic losses at $128 billion (all figures are U.S. dollars) for the first six months of the year. Aon's estimates are slightly lower at $117 billion. 

Nearly half of these damages were insured, with estimated amounts of $61 billion according to Gallagher Re. Aon places insured damages at $58 billion. 

Severe convective storms (SCS) in the United States caused significant damage, estimated at $48 billion by Gallagher Re, of which $37 billion are insured. The term "convective" refers to vertical air movements in meteorology. 

The worst episodes occurred in May. In its report, the reinsurer notes that including similar incidents from last year, insured damages related to SCS storms in the US total $100 billion over an 18-month period. 

In just one semester, 2024 already ranks as the fourth most costly year for insurers regarding SCS storm damages. A dozen of these extreme events caused over a billion dollars each in insured damages during the first six months. 

Scenarios analyzed by Gallagher Re show that in the United States, the SCS storm season starts earlier in the spring; additionally, the areas covered by these torrential rains are increasingly extensive and affect larger urban areas in the south and east of the country. 

An increasing burden 

The reinsurer also expresses concern about the impact of these weather conditions on tornado formation. Nearly 1,300 tornadoes were reported in the United States, with 1,064 confirmed by authorities. According to the Fujita scale, about 34 were classified as EF3 (severe) and three as EF4 (devastating). 

"As is now widely known and accepted, the insured costs associated with the US SCS peril have continued to drive a greater portion of annual losses in recent years. This is putting tremendous strain on national and regional primary insurance carriers who are increasingly forced to absorb most, if not all, of their claims payouts, given that a very small portion of losses are being ceded to reinsurance," says Gallagher Re. 

"Higher reinsurance premium costs to obtain aggregate covers mean insurers pay more for the same or less coverage. As primary insurer losses rise and quarterly earnings are impacted, this is now leading to higher premiums being felt by residential policyholders. These higher reinsurance costs are driving the bulk of premium rate rises seen across all 50 US states in recent years." 

In Texas 

On May 16, a powerful derecho struck the Houston area. Gusts reached 160 km/h, equivalent to Category 2 hurricane winds. This event illustrates the impact of an extreme weather event when it hits a densely populated area. 

This single event caused $2.6 billion in damages, of which $2 billion are insured, according to Gallagher Re. It also resulted in eight deaths. 

Misfortune seldom comes alone, as the saying goes. Hurricane Beryl, the earliest Category 5 hurricane in the history of the Atlantic storm season, also hit the same southern Texas region in July. 

After devastating the Caribbean and parts of Mexico before hitting southern Texas, Beryl stretched its path into the Great Lakes region, causing damage for nearly two weeks. 

Aon's report also forecasts an active tropical storm season this summer, due to high ocean temperatures. 

The threshold 

Regarding climate change, Gallagher Re reports that the average global temperature for the first half of 2024 has exceeded the pre-industrial average by 1.5°C. This figure comes from the National Oceanic Atmospheric Administration (NOAA), which has been compiling data since 1850. 

The 1.5°C threshold, set by the Paris Agreement, is significant. Scientists agree that the warming trend will be more concerning if this threshold is repeatedly exceeded. The resulting ocean temperature rise contributes to glacier melt at both poles. 

"Such global heat extremes are worrying, as they are likely to spur further melting of ice sheets, increase the intensity of tropical cyclones, and make local heatwaves more frequent and severe — confirming the projections of climate change research. Also, it is worth reminding that the major official global agencies do have differing preindustrial baseline averages," states the reinsurer's semi-annual report. 

Floods 

Both reports note that major floods affected various continents, particularly Central Europe from May 30 to June 3, with damages estimated at $2.2 billion by Gallagher Re. The provinces of Bavaria and Baden-Württemberg in southern Germany were particularly hard hit by this extreme event. 

Aon reports insured damages of $2.7 billion and six deaths for the same event. This disaster ranks fourth among the most costly insured damages for the first half of the year, with the others all related to SCS storms in the United States. 

Compared to the Bernd disaster, which caused insured damages of over $12 billion in 2021, the volume of precipitation has been just as significant in 2024, they note. However, the 2021 rains fell on a region less frequently hit by such events. Moreover, the topography of the watersheds, with many narrow valleys, worsened the damage three years ago. 

Aon notes that the German federal government now requires insurers to offer flood coverage, after considering making it mandatory. 

Significant floods also occurred in southern Brazil in the second quarter of 2024, from April 28 to May 3. Aon reports 182 deaths and economic losses of $2.5 billion. Gallagher Re estimates economic losses at $8.1 billion, of which $2 billion are insured damages. In Porto Alegre, in the state of Rio Grande do Sul, nearly 259 millimeters of rain were recorded in three days. 

Gallagher Re also reports the exceptional nature of the April flood in Dubai, United Arab Emirates, which caused six deaths. A total of 255 millimeters of rain fell in 24 hours. This small state on the Arabian Peninsula receives an average of 80 millimeters of rain per year. Losses are estimated at nearly $8.6 billion, of which $2.8 billion are insured damages. 

In China, floods that have affected the south and centre of the country since early June, and continued into mid-July, have caused 150 deaths and losses of $6.4 billion, with only $440 million covered by insurance, reports Aon. Losses are estimated at over $7 billion by Gallagher Re, which reports 200 deaths related to this event. 

Earthquake in Japan 

Both companies also highlight the January 1 earthquake in the Noto Peninsula of Japan as the single most damaging event. Economic losses from this earthquake are estimated at $17.9 billion by Aon but only $12 billion by Gallagher Re. Insured damages are estimated at $3 billion. 

This earthquake is also one of the deadliest disasters of 2024, causing 299 deaths. Aon's reported disasters caused around 6,000 deaths in the first half of the current year, below the long-term average. 

Deadly toll 

Other significant weather events in terms of mortality, according to Aon's report, include a three-week heatwave in June in Saudi Arabia, which caused over 1,000 deaths. A heatwave in Pakistan in late June resulted in 568 deaths. 

In East Africa, major floods between March 20 and April 30 led to 576 deaths. 

In India, too, throughout the second quarter, extreme heat was deadly, reports Gallagher Re. The country's Health Ministry reported 41,000 cases of severe heatstroke. 

The reinsurer also notes the significant landslide on May 24 in a mountainous region of Papua New Guinea. Local authorities estimated that between 670 and 2,000 people lost their lives in this disaster.