Claims for weather-related accidents are expected to exceed $100 billion for the third year in a row, as climate-related floods, hail, and wildfires become increasingly common.
According to Bloomberg Intelligence, the total global insured costs of natural-catastrophe events in the first half of 2023 have been estimated at $43 billion by Munich Re and $50 billion by Swiss Re.
In the United States, severe thunderstorms caused more than two-thirds of insured losses. The 12-figure benchmark is expected to be met despite the fact that just $5 billion of the $40 billion in losses caused by the year’s most disastrous catastrophe — the earthquake that struck Turkey and Syria and killed an estimated 58,000 people — was covered.
Furthermore, the whole US hurricane season, which runs through the end of November, has yet to conclude, while Swiss Re announced earlier this month that it has witnessed some limited insured losses attributable to summer heat waves in Europe and the US, which will be accounted for in the second-half results.
Natural disaster-insured losses were $125 billion in 2022, compared to an average cost of $81 billion in the previous ten years and $110 billion in the previous five.
Nonetheless, the increase in claims isn’t necessarily negative news for insurers. Swiss Re’s net income increased in the first half as it reduced its losses from natural disasters and past disasters drove greater demand for coverage even as it boosted policy premiums.
According to Bloomberg Intelligence:
A combination of increased loss severity induced by rising property prices, continuous urban expansion and economic growth, and the increasing intensity of weather events linked to climate change is driving the longer-term trend.
Natural disaster insured losses of $125 billion in 2022 compared to an average cost of $81 billion in the previous ten years and $110 billion in the previous five years, all at constant 2022 prices. Claims peaked in 2017 ($173 billion), 2011, ($158 billion), and 2005 ($155 billion). — Charles Graham, business intelligence analyst
On Monday, August 21, 2023, workers in Los Angeles, California, remove a fallen tree after Tropical Storm Hilary. Tropical Storm Hilary’s leftovers dumped record rainfall on California on Monday, interrupting flights but without causing major damage.