Hurricane Ian drives 2022 nat cat losses to $115 billion

Hurricane Ian and other extreme weather events such as the winter storms in Europe, flooding in Australia and South Africa as well as hailstorms in France and in the US resulted in an estimated $115 billion of natural catastrophe insured losses this year to date, according to Swiss Re Institute.

2022 is the second consecutive year in which the estimated insured losses total more than $100 billion, continuing the trend of a 5–7% average annual increase over the past decade.

The re/insurance industry covered roughly 45% of the economic losses this year, indicating a large protection gap across the world.

Martin Bertogg, head of Catastrophe Perils at Swiss Re, said: “Extreme weather events have led to high insured losses in 2022, underpinning a risk on the rise and unfolding on every continent.

Increasing exposures at risk

“Urban development, wealth accumulation in disaster-prone areas, inflation and climate change are key factors at play, turning extreme weather into ever rising natural catastrophe losses. 

“When Hurricane Andrew struck 30 years ago, a $20 billion loss event had never occurred before – now there have been seven such hurricanes in just the past six years.”

Hurricane Ian is this year’s costliest natural catastrophe with estimated preliminary insured losses of $50–65 billion. The category 4 hurricane made landfall in western Florida in late September with extreme winds, torrential rain and storm surge.

Swiss Re Institute estimates Ian is the second-costliest insured loss ever on sigma records after Hurricane Katrina in 2005. This highlights the threat potential of a single hurricane hitting a densely populated coastline, in an otherwise benign hurricane year.

Thierry Léger, group chief underwriting officer, said: “2022 has been another year of increased natural catastrophe loss activity, and demand for insurance is growing as the protection gap remains vast.

“To enable the insurance industry to keep up with increasing volatility and demand, it will be key to model evolving frequency and severity trends.”

Better analytics needed for secondary perils

Furthermore, in February, a series of winter storms hit Europe and prompted estimated insured losses of over $3.7 billion, bringing this key peril back on the insurance industry’s agenda.

The year to date also confirms the importance of secondary perils: In February and March, torrential rains led to widespread flooding in Australia that, at currently estimated $4 billion, is the country’s costliest-ever natural catastrophe. 

Next to numerous small to medium-sized hail- and thunderstorms in the US, France experienced the most severe series of hailstorms ever observed, with insured market losses reaching an estimated €5 billion.

The 2022 loss experience, compounded by the previous five years, emphasises a need to adopt a more forward-looking approach for all perils, noted the reinsurer.

Model and data availability need to be upscaled for secondary perils such as flood and hail particularly, as they are on the rise but still receive less industry attention, it emphasised.

Table1: Estimated total economic and insured losses in 2022 and 2021

_{Note: Preliminary and, due to rounding, some totals may not correspond with the sum of the separate figures. Source: Swiss Re Institute}