Global Natural Catastrophe Losses Surpass $100 Billion in 2023

In 2023, global insured natural catastrophe losses are projected to surpass $100 billion for the sixth time since 2017, as reported by Gallagher Re, a prominent reinsurance company. The primary contributors to this surge are severe thunderstorm-related events and the compounding effects of climate change. Severe convective storms account for two-thirds of all global insured losses, reaching an unprecedented $50 billion in the United States alone, marking a significant shift in the insurance landscape.

Steve Bowen, Chief Science Officer at Gallagher Re, notes that the annual toll of at least $100 billion has become a "new normal" for both public and private insurance companies. The report underscores the role of climate change, increased disaster exposure, and inflation in driving elevated losses. This impact is felt not only in traditional disaster-prone states like Florida, Louisiana, and California but also in regions unaccustomed to hurricanes and wildfires, where insurance premiums are witnessing major increases.

The United States stands out, representing a staggering 74% of all global insured losses through September. Severe convective storms, constituting two-thirds of all losses, have led to over $54 billion in preliminary insured losses in the U.S., surpassing the $50 billion threshold for the first time in a single year. The report signals a shift in the market, with some insurance carriers withdrawing operations in high-risk areas.

Global tropical cyclone activity has also seen a notable uptick in the first three quarters of 2023, with events like Hurricane Idalia, Typhoon Haikui, and Hurricane Hilary making significant impacts. Secondary perils, particularly severe convective storms, are identified as driving up loss costs for primary insurance carriers. The report emphasizes the challenges in obtaining aggregate cover schemes from reinsurers as climate-fueled intense outbreaks become more frequent.

As El Niño and climate change continue to exert influence, the world has witnessed notable events such as flooding in Libya, drought conditions in South America, and wildfires in Canada. The report concludes that the $197 billion insurance protection gap underscores the need for global citizens to better prepare for natural catastrophe risks. In a year marked by unprecedented natural catastrophe records and anomalous weather phenomena, the report serves as a call to action for enhanced global preparedness against the escalating impact of such events.

Reference

https://www.ajg.com/gallagherre/-/media/files/gallagher/gallagherre/natural-catastrophe-report-q3-2023.pdf