Global: Insured losses from severe thunderstorms reach $60bn
Source: Middle East Insurance Review | Jan 2024
Nat CAT will once again break loss records in 2023. A high number of low-to-medium-severity events will aggregate to insured losses of more than $100bn in 2023, estimated Swiss Re Institute, with severe thunderstorms being the main contributor. It is the first time ever that severe thunderstorms have caused this level of loss for the industry.
Swiss Re group chief economist Jérôme Haegeli said, “The cumulative effect of frequent, low-loss events, along with increasing property values and repair costs, has a big impact on an insurer’s profitability over a longer period. The high frequency of severe thunderstorms in 2023 has been an earnings’ test for the primary insurance industry.”
Losses from severe thunderstorms have steadily increased by 7% annually in the last 30 years. The year 2023 marks an increase of almost 90% compared to the previous five-year average ($32bn) and more than doubles the previous 10-year average ($27bn).
Urban development, wealth accumulation in disaster-prone areas and inflation are important factors at play, turning extreme weather into ever rising natural catastrophe losses. Rising temperatures are further increasing the risk of severe droughts and wildfires. With 2023 expected to be the warmest year on record, the effects of climate change are becoming apparent.
The earthquake in Türkiye and Syria is the costliest natural catastrophe in 2023, with insured losses of $6bn, while the Morocco earthquake was the strongest earthquake to hit the country since 1900. The disaster in Morocco also shows that rural areas are not immune to large-scale losses and need to be included in preventative efforts to improve resilience.