Claims for weather-related incidents are set to exceed $100 billion for the third year in a row, as floods, hail and wildfires linked to climate change become more frequent.
Munich Re has put the total global insured costs of natural-catastrophe events in the first half of 2023 at $43 billion, while Swiss Re has pegged it at $50 billion, according to a report by Bloomberg Intelligence.
More than two-thirds of the insured losses were as a result of severe thunderstorms in the US. The 12-figure threshold is likely to be passed even though just $5 billion of the $40 billion in damages caused by the year’s most devastating event — the earthquake that hit Turkey and Syria and claimed an estimated 58,000 lives — was insured.
And the full US hurricane season, which lasts until the end of November, has yet to run its course while Swiss Re said earlier this month that it has seen some limited insured losses related to the summer heat waves in Europe and the US, which will be accounted for in the second-half results.
Natural catastrophe insured losses were $125 billion in 2022, compared with an average cost of $81 billion over the past 10 years and $110 billion over the last five.
Still, the rise in claims isn’t necessarily bad news for the insurers. Swiss Re’s first-half net income rose as it contained its losses from natural catastrophes and past disasters drove up demand for coverage even as it raised policy prices.
What Bloomberg Intelligence Says:
Driving the longer-term trend is a combination of greater loss severity caused by rising property values, continued urban expansion and economic growth and the increasing intensity of weather events linked to climate change.
Natural catastrophe insured losses of $125 billion in 2022 compare with an average cost of $81 billion over the past 10 years and $110 billion over the last five, all at constant 2022 prices. Peak years for claims include 2017 ($173 billion), 2011 ($158 billion) and 2005 ($155 billion). — Charles Graham, BI analyst
Photograph: Workers remove a fallen tree following Tropical Storm Hilary in Los Angeles, Calif. on Monday, Aug. 21, 2023. The remnants of Tropical Storm Hilary pummeled California with record rains on Monday, disrupting flights but sparing its largest cities from widespread destruction. Photo credit: Jill Connelly/Bloomberg