H1 nat cat losses 22% higher than ten-year average as climate change drives extreme weather, says Swiss Re

Global insured nat cats losses of $35bn in the first half of 2022 are down on last year but 22% above the ten-year average, according to latest figures from Swiss Re, which warns the effects of climate change are increasingly evident with secondary perils causing mounting devastation in all parts of the world. Swiss Re Institute’s estimates for first-half insured nat cat losses compare with a ten-year average of $29bn. Man-made events triggered an additional $3bn of insured losses in H1 2022, down from an average of $5bn during the past decade, and bring the total catastrophe bill facing insurers to $38bn for the first six months. Insured nat cat losses were $46bn in the first half of last year, with man-made events costing $4bn, according to Swiss Re figures. It pegs global economic losses from natural and man-made catastrophe events at $75bn in the first half of 2022, down 7% on the $80bn ten-year average. Swiss Re said a series of winter storms in Europe, unprecedented flooding in Australia and South Africa, as well as a high number of thunderstorms in the US and Europe, were the main driver of first-half 2022 insured losses. Secondary perils such as hailstorms and flooding continue to drive insurance losses globally, added the reinsurer. Floods in Australia set a new record for insured flood losses in the country at close to $3.5bn, and were the costliest natural catastrophe for the insurance industry in the first half of 2022, according to its numbers. A series of winter storms hit Europe in February and prompted estimated claims of $3.5bn, bringing this key peril back on the insurance industry’s agenda, added Swiss Re. It warns that climate change is now increasingly evident and driving extreme weather events. Martin Bertogg, head of catastrophe perils at Swiss Re, said: “The effects of climate change are evident in increasingly extreme weather events, such as the unprecedented floods in Australia and South Africa. This confirms the trend we have observed over the last five years, that secondary perils are driving insured losses in every corner of the world.” He continued: “Unlike hurricanes or earthquakes, these perils are ubiquitous and exacerbated by rapid urbanisation in particularly vulnerable areas. Given the scale of the devastation across the globe, secondary perils require the same disciplined risk assessment as primary perils such as hurricanes.” Swiss Re added that record-high summer temperatures in many parts of Europe may lead to further losses caused by droughts and wildfires. “The global average temperature for June 2022 was about 0.3°C higher than the 1991-2020 average, making it the third-warmest June on record. As the warming climate is predicted to exacerbate droughts, the likelihood of wildfires increases, causing greater damage where rapid urban sprawl overlaps the wildland-urban interface,” said Swiss Re. Jérôme Jean Haegeli, Swiss Re’s chief economist, said: “Climate change is one of the biggest risks our society and the global economy is facing. With 75% of all natural catastrophes still uninsured, we see large protection gaps globally exacerbated by today's cost-of-living crisis. Partnering with the public sector, the insurance industry is critical for strengthening society's resilience to climate risks, by investing in and underwriting sustainable infrastructure.” Swiss Re figures compare with estimated first-half insured nat cat losses of $34bn from Munich Re. It also warned that the effects of climate change are becoming more and more evident. Aon said recently that global insured losses from natural disaster events in the first half of 2022 were $39bn and well above the 21st-century average.