New record of 142 nat cats adds up to $108bn in 2023 – Swiss Re

Global insured losses from natural catastrophes in 2023 exceeded $100bn for the fourth consecutive year in 2023, Swiss Re Institute has revealed.

Insured nat cat losses were $108bn in 2023, which Swiss Re said reaffirmed the 5-7% annual growth trend in global insured nat cat losses since 1994, outpacing global economic growth over the past 30 years.

From 1994 to 2023, inflation-adjusted insured losses from natural catastrophes averaged 5.9% per year, while global GDP grew by 2.7%. In other words, over the last 30 years, the relative loss burden compared to GDP has doubled.

The earthquake that hit Turkey and Syria in February 2023 was the costliest catastrophe, estimated insured losses of $6.2bn, noted the reinsurer’s latest Sigma report.

However, it was the frequency of events that was the main driver of accumulated insured losses for the year.

There were at least 30 medium severity events resulting in losses of $1-5bn in 2023, nearly twice the previous ten-year average of 17.

Of those events, 21 were severe convective storms (SCS), a new high, accounting for record $64bn in 2023.

Some 85% of SCS losses in 2023 originated in the US, while SCS losses are growing fastest in Europe, particularly Germany, Italy and France.

Swiss Re blamed climate change-induced hazard intensification as likely increasing losses in the future.

The Swiss Re Institute estimates insured losses “could double within the next ten years” as temperatures rise and extreme weather events become more frequent and intense.

Therefore, mitigation and adaptation measures are key to reduce future nat cat loss potential.

“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,” said Jérôme Jean Haegeli, Swiss Re’s group chief economist.

“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,” he said.

Moses Ojeisekhoba, Swiss Re’s CEO for global clients and solutions, added: “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.”