Severe thunderstorms, earthquakes, extensive flooding and heatwaves have hit the global insurance industry for $50 billion in the worst start to a year for the industry since 2011, according to a major new study that further highlights the intensifying impact of the climate crisis.
Findings published by reinsurance group Swiss Re revealed that a series of severe convective storms in the U.S. caused $35 billion in insured losses alone, amounting to almost 70 percent of the global total.
Ten such events each results in losses of over $1 billion, yielding the highest insured losses from such storms in a six-month period.
The single costliest disaster both in terms of economic and insured losses, however, was the earthquake in Turkey and Syria, which caused insured losses estimated at $5.3 billion, according to Swiss Re.
Moreover, New Zealand was hit by its two costliest weather-related insured loss events since 1970 with combined insured losses estimated at $2.3 billion, while heavy rainfall in northern Italy in mid-May led to extensive flooding and expected insured losses over $600 million.
Since early July, the U.S,. northwestern China and southern Europe have also faced severe heatwaves, with dry weather conditions and strong winds aggravating wildfires on many Greek islands, as well as in Italy and Algeria. Swiss Re said it was too early to estimate the damages resulting from the fires, but they will fuel concerns that significant weather-related losses will continue into the second half of the year.
Collectively, these increasingly climate-driven extreme weather events delivered insured losses in the first six months of the year that were almost twice as high as the $18.4 billion annual average for the last 10 years.
Jérôme Jean Haegeli, Swiss Re’s Group Chief Economist, said protective measures need to be taken for insurance products to remain economical for high-risk properties. “It is high time to invest in more climate adaption,” he said. “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.”
In response to the growing bill from natural catastrophes reinsurers have demanded much higher prices for cover, with FTSE 100 insurer Hiscox revealing that natural catastrophe reinsurance prices in North America were up 43 percent year-on-year.
In the first half of 2023, the overall economic losses from natural catastrophes amounted to $120 billion, almost double the 10-year average, and just $3 billion shy of the full total in 2022.