Natural Catastrophes Trending Upwards

Global insured losses from natural catastrophes reached US$125 billion in 2022, the second consecutive year in which insured losses from NatCats exceeded US$100 billion, according to the latest sigma study from Swiss Re Institute. And it looks like this trend is here to stay.

‘Today, average annual insured losses of more than US$100 billion are standard…’ Swiss Re said in the report, Natural catastrophes and inflation in 2022: a perfect storm.

‘This reaffirms the trend of a 5-7% average annual increase in insured losses over the past three decades,’ mostly due to rising severity of losses resulting from primary and secondary perils, Swiss Re said.

This trend of increasingly severe weather-related insured losses continues in Canada. Insured losses for severe weather events across Canada hit $3.1 billion last year, the third costliest year on record for Canadian P&C insurers.

Using Swiss Re’s 5-7% average annual increase trend, this means the industry could theoretically see $155 million to $217 million more in losses every year in Canada. In other words, in less than five years, the ‘new normal’ could be $4 billion a year in severe weather-related losses.