Nat cat insured losses totalled $108bn in 2023, says Swiss Re institute

Global insured losses from natural catastrophes in 2023 exceeded $100bn for a fourth consecutive year, according to Swiss Re Institute.

It said last year saw $108bn in insured losses, including a new record of 142 natural catastrophes. The costliest catastrophe was the earthquake in Turkey and Syria (estimated insured losses of $6.2bn).

Swiss Re said the main driver of insured loss accumulation is frequency of events, with severe convective storms (SCS) accounting for a record high of $64bn insured losses in 2023.

Swiss Re Institute noted that the losses reaffirm the 5%-7% annual growth trend in global insured natural catastrophe losses since 1994, adding that global insured losses from natural catastrophes outpaced global economic growth over the past 30 years. It estimates that insured losses could double within the next ten years as temperatures rise and extreme weather events become more frequent and intense.

Jérôme Jean Haegeli, Swiss Re’s group chief economist, said: “Even without a historic storm on the scale of Hurricane Ian, which hit Florida the year before, global natural catastrophe losses in 2023 were severe. This reconfirms the 30-year loss trend that’s been driven by the accumulation of assets in regions vulnerable to natural catastrophes. In the future, however, we must consider something more: climate-related hazard intensification. Fiercer storms and bigger floods fuelled by a warming planet are due to contribute more to losses. This demonstrates how urgent the need for action is, especially when taking into account structurally higher inflation that has caused post-disaster costs to soar.”

Most of the 142 insured natural catastrophes in 2023 were of medium severity, resulting in losses of $1bn-$5bn, said Swiss Re Institute, noting that there were at least 30 such events in 2023, many more than the previous ten-year average (17), and of those events, 21 were SCS. It pointed out that the number of these medium-severity events has grown by 7.5% since 1994, almost double the 3.9% increase in catastrophes generally.

Swiss Re Institute said that severe thunderstorms have become established as the second-largest loss-making peril (after tropical cyclones) due to exposures caused by urbanisation and economic and population growth. It added that hailstorms are by far the main contributor to insured losses from SCS, responsible for 50%-80% of all SCS-driven insured losses.

Global insured losses from SCS are mainly from the US (85%) but SCS-related insured losses were fastest growing in Europe, exceeding $5bn in each of the last three years, with hail risk in particular increasing, mainly in Germany, Italy and France.

Moses Ojeisekhoba, Swiss Re’s CEO global clients & solutions, said: “As weather hazards intensify due to climate change, risk assessment and insurance premiums need to keep up with the fast-evolving risk landscape. Looking ahead, we must focus on reducing the loss potential. 2023 was the hottest year on record, and the start to 2024 is following suit. 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.”

Swiss Re’s figures follow earlier estimates of global nat cat insured losses for 2023 from Aon ($118bn), Gallagher Re ($123bn) and Munich Re ($95bn).