Climate-induced hazard intensification will likely increase losses in the future, making adaptation measures necessary to reduce losses going forward, according to a new sigma report from Swiss Re, entitled Natural catastrophes in 2023: gearing up for today’s and tomorrow’s weather risks.
“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,” adds Moses Ojeisekhoba, Swiss Re’s CEO of global clients and solutions.
The year’s costliest catastrophe
Global insured losses from natural catastrophes in 2023 exceeded USD $100-billion for the fourth consecutive year. An earthquake in Turkey and Syria was the year’s costliest catastrophe with the industry reporting estimated insured losses of $6.2-billion (all figures in U.S. dollars). It’s estimated that 90 per cent of the damages occurring during the earthquake were uninsured.
Severe convective storms (SCS), meanwhile, and large-scale urban flooding were the main events driving insured natural catastrophe losses to $108-billion overall – in line with the five to seven per cent annual growth trend in global insured natural catastrophe losses reported since 1994.
The main contributor to insured losses
Hailstorms are by far the main contributor to insured losses from SCS, they add, saying hail is responsible for between 50 and 80 per cent of all SCS insured losses. (The report includes a primer on SCSs and how they form.)
“Swiss Re Institute estimates that insured losses could double within the next ten years as temperatures rise and extreme weather events become more frequent and intense. Therefore, mitigation and adaptation measures are key to reduce natural catastrophe risks,” they write.
Swiss Re Group’s chief economist adds that even without a historic storm occurring in 2023, natural catastrophe losses were severe with 142 insured-loss inducing natural catastrophes occurring during the year, the most ever recorded in a single year. “In the absence of an outlier peak loss-making event like Hurricane Ian in 2022, the frequency of events was the main driver of the full-year insured loss total,” the report states.