The report, which sheds light on the US losses, also spotlights the broader global landscape of insured losses stemming from natural catastrophes, estimating the figure at a staggering $50 billion. This places 2023 as the second highest year for such losses since the year 2011.
Swiss Re’s data underlines the undeniable influence of climate change, attributing these escalating losses to the growing frequency and intensity of extreme weather events.
The current year has become synonymous with a string of extreme weather events that can be directly linked to climate change. These include an unprecedented summer heatwave across the Northern Hemisphere, remarkably high ocean temperatures, and a series of atmospheric river incidents in the state of California.
Martin Bertogg, Head of Catastrophe Perils at Swiss Re, said: “With severe thunderstorms as the main driver for above-average insured losses in the first half of 2023, this secondary peril becomes one of the dominant global drivers of insured losses.”
He continued: “The above‑average losses reaffirm a 5 – 7% annual growth trend in insured losses, driven by a warming climate but even more so, by rapidly growing economic values in urbanised settings, globally. The cyclone and flood events in New Zealand in the first quarter of 2023 are testimonies of the risk to today’s large urban centres, continuing patterns observed in 2021 in the Germany flooding, and in 2022 in Australia and South Africa.”
Climate-related events are putting homeowner insurance policies at risk
The escalating threat posed by climate related disasters has had far-reaching consequences, significantly impacting consumer costs. Furthermore, this has compelled insurance companies to reassess their operations, with some even ceasing to offer new homeowner’s policies in climate-vulnerable states like Florida and California.
Thunderstorms have played a key role in the damage, with Texas bearing the brunt of their devastation. Notably, the report identifies a remarkable rise in the number of catastrophic events causing losses exceeding $1 billion each. In contrast to the yearly average of six such events over the past decade, the current year has witnessed ten.
A recent report from Munich Re, a leading reinsurer, also spotlighted a series of thunderstorms in mid-June as the most financially burdensome event thus far in 2023. This storm system wreaked havoc across substantial portions of Texas, racking up losses amounting to a staggering $8.4 billion, out of which approximately $7 billion was covered by insurance.
The overarching losses stemming from severe weather during the year’s first half total more than $35 billion, of which over $25 billion was insured, according to the Munich Re report.
Taking a broader view, Swiss Re Group’s latest assessment reveals that global economic losses resulting from natural catastrophes for the initial half of 2023 surpassed a staggering $120 billion. This striking figure surpasses the 10-year average by a substantial 46%, reinforcing the disconcerting trend of annual growth in insured losses by 5–7%. This trend can be attributed to the twin factors of a warming climate and rapid economic expansion in urbanized regions.
Speaking about the issue, Jérôme Jean Haegeli, Group Chief Economist of Swiss Re, said, “The effects of climate change can already be seen in certain perils like heatwaves, droughts, floods, and extreme precipitation.”
He further added, “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.” The report serves as an urgent call for comprehensive measures to mitigate these rising risks and safeguard our communities from the ever-growing threat of climate-related disasters.
Source: Swiss Re
