A new report from reinsurance broker Gallagher Re projects that the global insurance and reinsurance industry will lose $52 billion in losses due to natural catastrophes in the first half of 2023, with 69 percent, or $35 billion, due to Severe Convective Storm (SCS) disasters .
Total insured losses of $52 billion were 18% above the 10-year average and 39% above the 21st century average, according to the broker’s analysis. In the first half of 2023, economic losses from natural catastrophes amounted to US$138 billion, also higher than the ten-year and 21st century average, and the protection gap of the uninsured portion was as high as 63%, or US$86 billion.
For weather or climate events alone, excluding earthquakes or other non-atmospheric driven hazards, Gallagher Re estimates economic losses of $92 billion and insured losses of $46 billion for the period.
The unusually high level of SCS activity in the first six months of the year was confirmed by the reinsurance brokers’ report, which described the dangers for the re/insurance industry in the first half of 2023 as “highly dominant”.
In fact, the insurance industry paid a total of $35 billion for SCS risk, or 69% of the total, at least $34 billion of which came from the active multi-month pattern that led to a series of outbreaks across the United States
Gallagher Re noted that at least 812 tornadoes were confirmed in the first half of 2023, with hail a major contributor to the damage, with NOAA’s Storm Prediction Center (SPC) recording at least 729 tornadoes larger than 2.0 inches ( 5.1 cm) hail attack.communities across america
According to Gallagher Re, the US suffered the second most costly H1 exposure on record during a period when SCS was particularly active.
In terms of economic losses, disasters in the South China Sea accounted for 34% of the total disasters, the same as the earthquake disasters caused by a series of earthquakes in Turkey in February, causing economic losses of 45 billion US dollars. However, insurance penetration in the region is low, so the insured loss from this event is around USD 5 billion, or 11% of total insured losses in H1 2023.
Gallagher Re’s report also highlighted record-setting weather events in other parts of the world, including New Zealand, which experienced two of its worst weather events in January and February following torrential rain and the aftermath of Cyclone Gabriel.
Frequent floods also occurred in the Emilia-Romagna region of Italy, and secondary disaster losses continued to rise.
Gallagher Re said that in the first half of 2023, at least 25 natural disaster events caused economic losses of more than $1 billion, and at least 17 natural disaster events caused insurance payouts of more than $1 billion.
Steve Bowen, Chief Scientific Officer, Gallagher Re, commented: “The physical risks associated with natural disasters and the financial and human costs associated with these events continue to increase. In the first half of 2023 we have witnessed a series of Close the protection gap by preparing for increasingly severe events that continue to be endured.The arrival of El Niño is likely to bring more damage and impacts from weather and climate events globally, at least for the remainder of this year.
“While El Niño now appears to have historically contributed to global warming and led to more erratic weather patterns, the lingering effects of climate change will only amplify the associated impacts on life and property. In short, extreme weather/climate events are expected to become more serious.
“Governments and private organizations are accelerating investments to help ensure the world is proactively prepared for rapidly changing challenges related to physical and non-physical hazards. Climate change is often discussed in the future tense, but today we have seen more evidence of its Influence.”