Thunderstorm Losses Break Records in 2023, Per Munich Re

In a recent update, Munich Re said that despite the fact there were no extreme individual losses, 2023 was characterized by extremely high insured losses from natural disasters.

The reinsurer reported that worldwide natural disasters in 2023 resulted in losses of around $250 billion ($250 billion in 2022), with insured losses of $95 billion ($125 billion in 2022), adding that overall losses tally with the 5-year average, while insured losses were slightly below the average figure of $105 billion.

Unlike in previous years, Munich Re said, there were no megadisasters in industrialized countries that drove losses up (such as Hurricane Ian in 2022, which caused overall losses of $100 billion and insured losses of $60 billion).

The reinsurer said that loss statistics were characterized by a large number of severe regional storms and added that such high thunderstorm losses have never been recorded before in the United States or in Europe. Assets worth around $66 billion were destroyed in North America, of which $50 billion was insured, while in Europe, the figure was $10 billion, of which $8 billion was insured.

A large body of scientific research indicates that climate change favors severe weather with heavy hailstorms, said the reinsurer. The Munich Re update also specified that loss statistics from thunderstorms in North America and other regions are trending upwards.

Global Temperature Set To Break Record

Weather disasters were exacerbated by extremely high temperatures, Munich Re said. Worldwide, average temperatures in November were roughly 1.3°C above those in preindustrial times (1850–1900), making 2023 the hottest year since temperature measurements began, which means that the last 10 years are the hottest on record, the update explained.

The El Niño phenomenon, a natural climate oscillation in the North Pacific with effects on extreme weather in many regions of the world, played a role in the temperatures, Munich Re said. However, researchers attribute the trend toward warmer global temperatures mainly to climate change, with natural fluctuations playing a subordinate role, according to the update.

In many regions, Munich Re said that major wildfires resulted from heat waves and drought. Specifically in Canada, fires raged for several weeks, destroying an unprecedented 18.5 million hectares of forest, the reinsurer stated.

"The warming of the earth that has been accelerating for some years is intensifying the extreme weather in many regions, leading to increasing loss potentials. More water evaporates at higher temperatures, and additional moisture in the atmosphere provides further energy for severe storms. Society and industry need to adapt to the changing risks—otherwise, loss burdens will inevitably increase," explained Ernst Rauch, chief climate scientist at Munich Re.

The Year's Costliest Events

The series of earthquakes in southeast Turkey and Syria in February was the year's most destructive natural disaster. With overall losses of around $50 billion, it was also the year's costliest natural disaster, although insured losses came to just $5.5 billion, Munich Re reported.

In terms of overall losses, the second-costliest natural disaster was Typhoon Doksuri. In July, the storm brushed the Philippines before making landfall on the Chinese mainland, where heavy rainfall triggered destructive flooding. Overall losses came to around $25 billion, of which only roughly $2 billion was insured—an example of the large insurance gap for natural disasters that persists in China, explained the reinsurer.

The rapid intensification of Hurricane Otis on the west coast of Mexico in October was another exceptional event and was the most severe storm ever to hit Mexico's Pacific coast, the update said. Overall losses are estimated at $12 billion, and insured losses are around $4 billion due to the high concentration of hotels in the city, Munich Re stated.

Doksuri and Otis fall into the pattern that scientists expect as a result of climate change, namely a shift toward an increased number of intense storms and storms with extreme rainfall, the update said. Experts also attribute the more frequently observed rapid intensification of tropical storms to climate change, Munich Re explained.

North America (With Central America/Caribbean)

North America once again recorded the highest losses worldwide, although this year its share of global losses was smaller than usual (40 percent in 2023 compared to the 5-year average of 57 percent), said Munich Re. Natural disasters destroyed assets worth $100 billion, of which around $67 billion was insured. Despite the large number of severe thunderstorms, the reinsurer said the loss amount for all natural disasters was less than that of the previous year (overall losses of $160 billion, with $100 billion insured).

The hurricane season in the United States was comparatively mild, per Munich Re. Although Hurricane Idalia, one of the most severe storms of the year, hit the US mainland, the affected region in northwest Florida is sparsely populated, the update explained.

However, the hurricane season in the North Atlantic was more active than average with 20 named storms, including 7 hurricanes, 3 of which were major hurricanes, as high water temperatures offset the dampening effect of El Niño, Munich Re said in the update. However, they said most of the storms did not reach land but raged over the sea.

The update also said two thunderstorm outbreaks in the United States in March (in the Midwest) and in June (in Texas) numbered among the year's costliest natural disasters worldwide in terms of insured losses. These thunderstorm series alone caused combined overall losses of $17 billion, of which around $12 billion was insured, said the reinsurer.

A devastating fire fanned by strong winds swept across Hawaii in August, destroying large parts of the coastal town of Lahaina on the island of Maui, according to the update. Like the Marshall Fire in Colorado in December 2021, this event shows that grassfires in high-wind conditions can spread rapidly and cause significant losses, Munich Re explained. Overall losses are estimated at $5.5 billion, of which roughly $3.5 billion was insured, the update said.