A series of severe convective storms struck the US and accounted for 68% of global insured natural catastrophe losses in the first half of 2023, highlighting the increasing loss impacts of secondary perils.
Severe convective storms caused USD $35 billion, nearly 70%, in insured losses worldwide during H123.
According to analysts from Swiss Re Institute, this means that insured losses are almost twice as high in a six month period as the annual average of the last ten years ($18.4 billion).
Across the US, a series of severe thunderstorms prompted insured losses of $34 billion in H123, marking it as the highest ever insured losses in a six-month period.
Ten events caused losses of $1 billion and above each, compared to an annual average of six events for the previous ten years. The most affected state was Texas.
If you recall, in June, catastrophe modeller Karen Clark & Company (KCC) estimated that the June hailstorm in Texas had caused insured losses of over $1 billion.
The firm noted that the storms were stronger than average due to intense instability, producing larger updrafts that penetrated the atmosphere, allowing large hail to grow.
Moving towards New Zealand, the country was hit by two severe weather events just two weeks apart in early 2023, highlighting the growing risk of weather-related perils hitting large urban centres.
The North Island of New Zealand was hit in quick succession in the first quarter with severe flooding in Auckland, the country’s largest city, and the remnants of Cyclone Gabrielle. Both of these winded up becoming the two costliest weather-related insured loss events in New Zealand since 1970, with combined insured losses estimated to be $2.3 billion.
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. 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 urbanized 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.”
Jérôme Jean Haegeli, Swiss Re’s Group Chief Economist, added: “The effects of climate change can already be seen in certain perils like heatwaves, droughts, floods and extreme precipitation. 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. Protective measures need to be taken for insurance products to remain economical for such properties at high risk. It is high time to invest in more climate adaption.”
In addition, earthquakes are also still causing some of the most severe humanitarian and financial consequences. The single costliest disaster both in terms of economic and insured losses was the earthquake in Turkey and Syria which caused a devastating amount of damage, and affected the livelihood of millions of people across the region.
According to Swiss Re, insured losses are estimated at $5.3 billion, whereas the preliminary economic losses are at
$34 billion, estimates the World Bank.
Lastly, during H123, the overall economic losses stemming from natural catastrophes amounted to $120 billion, compared to $123 billion, the prior-year period, 46% above the ten-year average.
