Nat cat insured losses hit $95bn last year: Munich Re

Global insured losses from natural disasters reached $95bn last year, below the $105bn five-year average but above the $90bn average over the past decade, according to Munich Re.

It noted that these losses came despite no single mega loss and included record thunderstorm claims in the hottest year ever.

The insured loss is down from the $125bn recorded in 2022, Munich reports. Economic losses totalled $250bn in 2023, in line with the five-year average, and there were more than 74,000 fatalities.

Munich Re said that unlike previous years, there were no mega-disasters in industrialised countries that drove losses up. Instead, losses were driven by the large number of severe regional storms, it added.

It said record thunderstorm damage in the US and Europe caused $76bn in overall losses. Some $66bn of losses occurred in the US and $10bn in Europe. Of this, $58bn was insured – $50bn in the US and $8bn in Europe.

North America once again recorded the highest losses worldwide, although this year its share of global losses was smaller than usual at 40%, compared to a five-year average of 57%, according to Munich Re.

Natural disasters destroyed assets worth $100bn in the US, of which around $67bn was insured. This compares to overall losses of $160bn in 2022 with $100bn of insured losses.

The US hurricane season was “comparatively mild” for insurers, said Munich Re. It explained that the North Atlantic Hurricane season was more active than average, with 20 named storms, including seven hurricanes, three of which were major hurricanes. However, most of the storms did not reach land.

Two thunderstorm outbreaks in the US in March and June were among last year’s costliest insured natural disasters. These thunderstorm series alone caused combined overall losses of $17bn, of which around $12bn was insured.

Losses from natural disasters in Europe came to $83bn last year, compared to $77bn in 2022, largely due to the earthquake in Turkey. Insured losses came to around $19bn from $18bn in 2022. Munich Re said storms in the Alpine region and Mediterranean area contributed to the record thunderstorm losses.

Torrential rainfall in countries along the Adriatic coast caused widespread flooding in May and August. A low-pressure system at the start of September triggered severe flooding, particularly in Greece, and then intensified over the Mediterranean to become Cyclone Daniel. Losses from these events in Europe amounted to $17bn, of which $2bn was insured.

Sustained rainfall caused heavy flooding in many parts of northern Germany in December but Munich Re said it doesn’t have accurate losses for that event yet.

Overall losses in in the Asia-Pacific and Africa region stood at $64bn in 2023, slightly lower than $66bn in the previous year. Approximately $8bn of this amount was insured, compared to $11bn in 2022. Munch Re said Japan, which is highly exposed to natural hazards, was largely spared major damage in 2023.

The reinsurer said last year’s global weather disasters were exacerbated by record high temperatures, which were roughly 1.3°C above pre-industrial times through to November. Many regions of the world saw major wildfires caused by heatwaves and drought last year.

Munich Re added that the El Niño phenomenon, a natural climate oscillation in the North Pacific with effects on extreme weather in many regions of the world, played a role in the high temperatures. However, researchers attribute the trend towards warmer global temperatures mainly to climate change, with natural fluctuations playing a subordinate role, it said.

The series of earthquakes in southeast Turkey and Syria in February was last year’s most destructive natural disaster, killing 58,000 people and causing overall losses of $50bn. But despite the fact that earthquake insurance is mandatory for residential buildings in Turkey, insured losses came to just $5.5bn, according to Munich Re.

The second-costliest natural disaster was Typhoon Doksuri, which brushed the Philippines’ coastline before making landfall at Jinjiang in Fujian province on the Chinese mainland, with wind speeds of around 180 km/h. Overall losses came to around $25bn, of which only roughly $2bn was insured. Munich Re said this is an example of the large insurance gap for natural disasters that persists in China.