Global catastrophes losses for the first half of this year are largely without insurance coverage leaving the economic losses as huge liabilities for individuals businesses and government sought out alone without any risk mitigation.
This half year report made available from insurer Aon revealed that economic losses stemming from global natural disasters reached an estimated US$194bn in the first half of 2023, the fifth highest on record and the highest since 2011.
The spikes in the global estimation show that earthquakes in Turkey and Syria during the first quarter of 2023 were responsible for nearly half of the total economic losses, estimated at US$91bn. The event also became the deadliest global disaster since 2010 and the costliest in both countries’ modern histories. As a result, economic losses in the EMEA region were unprecedented at US$111bn, exceeding the previous 1H record of US$71bn set in 1990.
Aon says the event showed that regulation and enforcement of modern building codes are of critical importance to prevent material losses and fatalities. Despite relatively strict and modern building codes currently in place in Turkey, structural integrity and performance varied in the affected regions. Many of the collapsed buildings were built relatively recently, with many total collapses of newly built multi-story residential buildings.
Michal Lörinc, head of catastrophe insight at Aon, said: “Despite the reality that communities globally remain at risk to catastrophes, only about 27% of economic losses this year have been insured. These devastating events reinforce the importance of resilience and the mitigation of risk, such as enforcing building codes, which was highlighted by the Turkey and Syria earthquakes.
“As we continue to face interconnected risks, we are focused on scaling risk mitigation and helping organizations make better decisions to close the global protection gap and enrich lives around the world.”
While the earthquake event was the costliest from an insurance perspective, severe convective storm activity in the US dominated global losses during this period. In the first half of 2023, such storms were responsible for at least 13 individual billion-dollar events and US$35bn in total preliminary insured losses, setting a new 1H record.
The Aon report also reveals that this year’s economic losses of US$194bn already constitutes 60% of the average annual global total. Global insured losses from natural disaster events in 1H 2023 were US$53bn, preliminarily 46% above the 21st-Century average. It adds that disaster costs continued to be affected by inflationary pressure, still persistent in many parts of the world, as well as other societal factors including demographics and wealth distribution that remain a major driver of financial loss.