Swiss Re Sigma: Natural Catastrophes, Insured Losses Surge

The year 2023 saw an accumulation of 142 natural catastrophes resulting in $108 billion in insured losses, according to findings by the Swiss Re Institute.

Global insured losses stemming from natural catastrophes in 2023 exceeded $100 billion for the fourth consecutive year. The costliest of these catastrophes was an earthquake in Turkey and Syria, which incurred estimated insured losses of $6.2 billion.

The frequency of these events was a primary driver behind the accumulation of insured losses. Severe convective storms (SCS) accounted for a record-high $64 billion in losses in 2023. Notably, 85 percent of these SCS losses originated in the United States, while Europe witnessed the fastest-growing SCS losses.

Jérôme Jean Haegeli, Swiss Re's group chief economist, said, "Even without a historic storm on the scale of Hurricane Ian, which hit Florida the year before, global natural catastrophe losses in 2023 were severe. This reconfirms the 30-year loss trend that's been driven by the accumulation of assets in regions vulnerable to natural catastrophes. In the future, however, we must consider something more: climate-related hazard intensification. Fiercer storms and bigger floods fueled by a warming planet are due to contribute more to losses. This demonstrates how urgent the need for action is, especially when taking into account structurally higher inflation that has caused post-disaster costs to soar."

Moses Ojeisekhoba, Swiss Re's CEO, Global Clients & Solutions, said, "As weather hazards intensify due to climate change, risk assessment and insurance premiums need to keep up with the fast-evolving risk landscape. Looking ahead, we must focus on reducing the loss potential. 2023 was the hottest year on record, and the start to 2024 is following suit. Keeping property insurance sustainable and affordable requires a concerted effort by the private industry, the public sector and broader society—not just to mitigate climate risks, but to adapt to a world of more intense weather."

In 2023, the earthquake in Turkey and Syria stood out as the most destructive natural catastrophe, with insured losses totaling $6.2 billion. Additionally, a record number of 142 insured natural catastrophes occurred during the year, with many causing medium-severity losses ranging from $1 to $5 billion.

Severe convective storms (SCS) emerged as the second-largest loss-making peril after tropical cyclones, driven by urbanization and economic growth. Hailstorms contributed significantly to SCS-driven insured losses.

The increase in SCS-related losses is attributed to factors such as economic and population growth, urbanization, and changes in exposure vulnerabilities, including the rapid installation of solar power systems.

To mitigate losses, adaptation measures such as enforcing building codes and building flood protection barriers are recommended by Swiss Re. Collaboration among insurers, insurance associations, and the public sector is essential for effective risk mitigation, said Swiss Re.

The sigma study, Natural Catastrophes in 2023: Gearing up for Today's and Tomorrow's Weather Risks, is available for download.