Insured Natural Catastrophe Losses To Again Top $100 Billion in 2023

Worldwide insured losses from natural catastrophes are set to exceed $100 billion again this year, driven by the high frequency of low single-digit billion-dollar loss events, according to Swiss Re.

It's the fourth consecutive year that insured natural catastrophe losses topped $100 billion, the reinsurer said.

Severe thunderstorms, otherwise known as severe convective storms (SCS), are the principal contributor to this year's insured loss total, Swiss Re said. Losses from severe thunderstorms will reach an all-time high of $60 billion this year, according to the reinsurer's estimate.

"The cumulative effect of frequent, low-loss events, along with increasing property values and repair costs, has a big impact on an insurer's profitability over a longer period," Jérôme Jean Haegeli, Swiss Re's group chief economist, said in a statement. "The high frequency of severe thunderstorms in 2023 has been an earnings test for the primary insurance industry."

Losses from severe thunderstorms have steadily increased by 7 percent per year over the last 30 years, Swiss Re said. This year's losses from severe thunderstorms represent a nearly 90 percent increase over the previous 5-year average of $32 billion and more than doubles the 10-year average of $27 billion, the reinsurer said.

The United States is particularly prone to SCS due to its geographic location, Swiss Re said, with 2023 marking the first time insured losses for US SCS activity topped $50 billion, which is a total that Swiss Re expects to continue increasing in coming years.

Europe has also seen an increase in insured losses from severe thunderstorms, according to Swiss Re.

Swiss Re noted that while 2023 North Atlantic hurricane season losses remain below average, Hurricane Otis will likely become the costliest insured event ever in Mexico. In New Zealand, floods and cyclones caused the costliest weather-related insured losses ever at $2.4 billion, while the Maui wildfires are estimated to become the costliest insured loss ever in Hawaii at $3.5 billion.

The earthquake in Turkey and Syria was the costliest natural catastrophe in 2023, with insured losses of $6 billion, Swiss Re said.