Record Global Insured Losses from Natural Catastrophes Highlight Growing Climate Challenges

Gallagher Re’s latest Natural Catastrophe and Climate Report paints a stark picture of the escalating costs and frequency of natural disasters. In 2023, the global insured losses from natural catastrophes reached an unprecedented $123 billion, exceeding the $100 billion mark for the fourth consecutive year. A significant portion of these losses, approximately $110 billion, was borne by private insurers, with public entities covering the remaining $13 billion.

The report identifies severe convective storms (SCS) as the primary drivers of these losses, particularly in the United States, where six of the top ten costliest insured events occurred. These SCS events accounted for a staggering 58% of the global insured losses, translating to about $71 billion, with the U.S. alone facing $60 billion in damages.

While ’peak’ perils like hurricanes and earthquakes traditionally garner the most attention, the rising impact of ’non-peak’ or secondary perils like SCS is reshaping the landscape of risk assessment and planning in the insurance industry. This shift underscores the growing importance of advanced analytics and catastrophe modeling in understanding the combined effects of climate change and socio-economic factors on potential losses.

2023 also highlighted the significant protection gap in global insurance coverage. The February earthquake sequence in Turkey and Syria, which resulted in $46.2 billion in economic losses but only $6.1 billion in insured losses, exemplifies this gap. Similarly, other events like the Marrakech-Safi earthquake in Morocco and Typhoon Doksuri in China further underscored the disparity between economic and insured losses.

The report’s additional findings reveal a year of extremes, with a record 66 individual billion-dollar economic loss events and 34 billion-dollar insured loss events. Notably, 2023 was the warmest year on record since 1850, exacerbating natural disasters like Canada’s worst wildfire season and Hurricane Otis in Mexico, the costliest insured event in the country’s history.