In the first six months of 2023, global insured losses from natural catastrophes reached $52 billion, exceeding the decadal average by 18% and the 21st Century average by 39%, according to global reinsurance broker Gallagher Re’s.
The dominant factor behind these losses was the severe convective storm (SCS) peril, particularly in the US, where a highly active multi-month pattern led to a minimum of $34 billion in insured losses. This represented a staggering 65% of all global insured losses during this period, the report noted.
The US, alone, accounted for 76% of the world’s insured losses from natural hazards in H1 2023. The country experienced at least 812 confirmed tornadoes and widespread hailstorms, resulting in extensive damage and devastation.
The National Oceanic and Atmospheric Administration (NOAA) recorded over 729 instances of hail larger than 2.0 inches in diameter striking communities across the US. The insurance industry faced significant payouts as a result.
Europe also faced its share of natural hazard activity, with thunderstorms in June leading to a billion-dollar insurance bill for parts of Germany and France. Additionally, other parts of the world experienced notable losses.
Turkey and Syria were impacted by a series of historic earthquakes in February, resulting in a confirmed death toll of over 59,250 and insured costs exceeding USD5 billion.
New Zealand endured its two costliest weather events on record, with torrential rains and the remnants of Cyclone Gabrielle causing combined insured losses of at least $2.3 billion.
Italy’s Emilia-Romagna region saw record-setting rainfall in May, causing extensive flooding and expected insured losses reaching into the hundreds of millions of dollars.
The transition to El Niño conditions, combined with the influence of climate change, fueled catastrophic wildfires in Canada, severe drought conditions in South America, Europe, and Asia, and deadly heatwaves in parts of North America and Asia. Africa suffered heavy casualties, with more than 2,500 deaths caused by the seasonal monsoon and the remnants of Cyclone Freddy.
While the total economic losses from natural hazards in H1 2023 reached $138 billion, with the severe convective storm and earthquake perils accounting for nearly 70% of the losses, the insurance industry covered $52 billion, leaving a protection gap of 63%.
This emphasises the importance of adequate insurance coverage in mitigating the financial impact of natural disasters.
As loss development continues and new data is obtained, these preliminary figures may be subject to change in the coming weeks and months, the report noted.
However, the significant insured losses incurred during the first half of 2023 highlight the urgent need for preparedness and resilience in the face of increasingly severe weather events.
“The physical risks associated with natural hazards, and the financial and human costs associated with these events, continue to grow. We witnessed a series of significant events during the first half of 2023 that puts further spotlight on the need to close the protection gap by better preparing for the increasingly consequential events that the world continues to endure. The arrival of El Niño brings the potential for even more global disruption and impacts from weather and climate events through at least the rest of the year,” said Gallagher Re’s Chief Science Officer, Steve Bowen.
“While El Niño historically causes the globe to become warmer and leads to more volatile weather patterns, the ongoing influence from climate change will only amplify associated impacts to life and property. To put it simply, extreme weather / climate events are anticipated to become more severe.
“Governments and private organizations are accelerating their investments to help ensure the world is proactively prepared to handle our quickly evolving physical and non-physical hazard-related challenges. Climate change is often discussed in future tense, but we are already seeing more evidence of its effects today,” he added.