In 2023, economic losses related to natural catastrophes reached $291-billion (all figures in U.S. dollars), insured losses were $117-billion and natural catastrophe insured losses were $108-billion, up from the previous 10-year average of $89-billion, according to the most recent sigma report from Swiss Re, Natural catastrophes in 2023: Gearing up for today’s and tomorrow’s weather risks. 

Severe convective storms 

The report takes a close look at severe convective storms (SCS), saying these accounted for an estimated $64-billion in insured losses in 2023. “SCS is the umbrella term for a range of hazards including tornadic and straight-line winds, and large hailstones,” they write. “Increased exposures due to economic and population growth, urbanization and wealth accumulation remain the main force behind SCS-related losses and climate change effects are likely to exacerbate the trend,” they add.

Main driver was frequency 

Overall, the report states that the main driver of insured losses in 2023 was frequency, with 142 insured-loss-inducing catastrophes recorded during the year. “The fastest growing category of catastrophes is medium-severity events,” they write.

Medium-severity events (events causing losses between $1-billion and $5-billion, these include SCSs), also set a new record in 2023 with at least 30 such events recorded, up from the previous 10-year average of 17 events annually. “The number of these medium-severity events has grown 7.5 per cent since 1994, almost double the 3.9 per cent increase in catastrophes generally,” they write. “After tropical cyclones SCS have collectively become the second largest loss-making peril, with hailstorms the main driver.” 

Fast-evolving risk landscape 

They say relative to GDP, Swiss Re estimates that the insurance loss burden from catastrophes has more than doubled over the last 30 years. “Extrapolating our estimated long-term trend rate of five to seven per cent, we estimate that today’s burden could double over the coming decade,” they write. “As weather hazards are intensifying due to climate change, risk assessment and insurance premiums need to keep up with the fast-evolving risk landscape.”