Friday 11 August 2023

Natural catastrophes cost insurers $50bn in the first half of 2023

Natural catastrophes cost insurers $50bn in the first half of 2023

The global insurance industry was hit with $50 billion (£39bn) in insured losses in the first half of 2023 as a result of natural catastrophes.

That included severe thunderstorms, heatwaves, extensive flooding and earthquakes, according to a major new report from reinsurance group Swiss Re.

It also reveals a series of severe connective storms in the US accounted for 68% of the global catastrophe losses alone, costing $35 billion (£28bn).

That means insured losses were almost twice as high in a six-month period as the annual average of the last 10 years.

A total of 10 events caused losses of $1 billion (£0.79bn) and above each, compared to an annual average of six events for the last 10 years.

The single costliest disaster in terms of both economic and insured losses was the earthquakes in Turkey and Syria, which caused losses estimated at $5.3 billion (£4.2bn).

New Zealand was also hit by two severe weather events just two weeks apart in early 2023, becoming the costliest weather-related insured loss events in the country since 1970, with combined inured losses estimated at $2.3 billion (£1.8bn).

In addition, heavy rainfalls in northern Italy's Emilia-Romagna region in mid-May led to extensive flooding and expected insured losses of more than $0.6 billion (£0.47bn), the costliest weather-related event in the country since 1970.

Since early July, the US, northwest China and southern Europe have become heatwave hotspots, with dry weather conditions and strong winds in the latter region aggravating wildfires on many Greek islands, as well as in Italy and Algeria.

Swiss Re suggests it is, however, still too early to estimate the damages regarding both the economic and insured losses.

Jérôme Jean Haegeli, Swiss Re's Group Chief Economist said: “The effects of climate change can already be seen in certain perils like heatwaves, droughts, floods and extreme precipitation. Besides the impact of climate change, land use planning in more exposed coastal and riverine areas and urban sprawl into the wilderness, generate a hard-to-revert combination of high value exposure in higher risk environments.

“Protective measures need to be taken for insurance products to remain economical for such properties at high risk. It is high time to invest in more climate adaption.”

Written by

Bruna Pinhoni

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