Natural catastrophes will once again break several loss records in 2023 as a high number of low-to-medium-severity events will add up to insured losses of more than US$100bn in 2023, according to estimates by Swiss Re Institute, with severe thunderstorms being the main contributor.
Losses from severe thunderstorms have steadily increased by 7% annually in the last 30 years. 2023 marks an increase of almost 90% compared to the previous 5-year average (US$32bn), and more than doubles the previous 10-year average of US$27bn.
Jérôme Jean Haegeli, Swiss Re’s Group chief economist, said: “The cumulative effect of frequent, low-loss events, along with increasing property values and repair costs, has a big impact on an insurer’s profitability over a longer period. The high frequency of severe convective storms in 2023 has been an earnings’ test for the primary insurance industry.”
The amount of US$50bn insured losses for US SCS activity was exceeded for the first time in 2023, and Swiss Re says it is set to keep rising. The US has experienced 18 events year to date which each caused insured losses of US$1bn and above.
Europe has also seen an increase in insured losses from severe thunderstorms, with Italy the most affected in 2023 and France the year before. Italy experienced losses of more than US$3.3bn, the costliest natural catastrophe-related insured losses ever in Italy.
While losses from the North Atlantic hurricane season remain below average in 2023 to date, hurricane Otis will likely become the costliest insured event in Mexico according to Swiss Re Institute. In New Zealand, floods and cyclones caused the costliest weather-related insured losses ever for the country (US$2.4bn), while the wildfires on Maui are estimated to become the costliest insured loss event ever for the state of Hawaii (US$3.5bn).
The earthquake in Turkey and Syria is the costliest natural catastrophe in 2023, with insured losses of US$6bn, while the Morocco earthquake was the strongest earthquake to hit the country since 1900. Swiss Re adds that the disaster in Morocco also shows that rural areas are not immune to large-scale losses and need to be included in preventative efforts to improve resilience.
