According to the Swiss Re Institute, Hurricane Ian, alongside the winter storms in Europe, flooding in Australia and South Africa, and hailstorms in France and the US, have resulted in an estimated $115 billion of natural catastrophe insured losses this year to date.
The re/insurance industry covered around 45% of the economic losses this year, which Swiss Re says further indicates a large protection gap across the world.
Meanwhile, 2022 is also the second consecutive year in which the estimated insured losses total more than $100 billion, continuing the trend of a 5-7% average annual increase over the past decade.
Swiss Re Institute observes that the year’s costliest natural catastrophe was Hurricane Ian, with estimated preliminary insured losses of $50–65 billion.
Based on its sigma records, Hurricane Ian is the second costliest insured loss event ever after Hurricane Katrina in 2005, highlighting the threat potential of a single hurricane hitting a densely populated coastline, in an otherwise benign hurricane year.
Further, in February, a series of winter storms hit Europe and prompted estimated insured losses of over $3.7 billion. Australia also saw its costliest-ever natural catastrophe event, with widespread flooding that caused insured losses estimated at $4 billion.
Throughout spring and summer, France experienced the most severe series of hailstorms ever observed, with insured market losses reaching an estimated €5 billion, according to the Swiss Re Institute.
Thierry Léger, Group Chief Underwriting Officer, commented, “2022 has been another year of increased natural catastrophe loss activity, and demand for insurance is growing as the protection gap remains vast.
“To enable the insurance industry to keep up with increasing volatility and demand, it will be key to model evolving frequency and severity trends. Pricing needs to reflect the effective risk. In this complex environment, Swiss Re is ready to support clients with our strong balance sheet, risk capacity and expertise.”
Martin Bertogg, Head of Catastrophe Perils at Swiss Re, added, “Extreme weather events have led to high insured losses in 2022, underpinning a risk on the rise and unfolding on every continent.
“Urban development, wealth accumulation in disaster-prone areas, inflation and climate change are key factors at play, turning extreme weather into ever-rising natural catastrophe losses. When Hurricane Andrew struck 30 years ago, a USD 20 billion loss event had never occurred before – now there have been seven such hurricanes in just the past six years.
Bertogg continued, “At Swiss Re, we are continuously adapting our natural catastrophe models to anticipate trend risks explicitly, enabling us to stay ahead of the curve and provide sustainable cover to our clients – such as with our new hurricane model.
“The insurance industry is managing natural catastrophe risk, building on state-of-the-art simulation-based modelling for many perils. However, the 2022 loss experience, compounded by the previous five years, emphasizes a need to adopt a more forward-looking approach for all perils.
“Model and data availability need to be upscaled for secondary perils such as flood and hail particularly, as they are on the rise but still receive less industry attention.”