Natural disasters cost insurers 108 billion in 2023, according to Swiss Re

2024-03-26 18:14:25

Losses covered by insurers risk doubling over the next ten years due to climate change, which makes weather phenomena more frequent and more intense, reinsurance giant Swiss Re warned on Tuesday.

The Swiss group, which acts as an insurer for insurers, warns in particular of an increase in costs for severe storms, which are now the second source of losses for insurers, after tropical cyclones.

Last year, natural disasters caused 280 billion dollars in damage worldwide, including 108 billion dollars covered by insurance companies, the Swiss group quantified on Tuesday in its annual study, which provides an overview places.

The amount of damage and the share covered by insurers fell compared to the previous year while the bill had swelled in 2022 under the effect of the hurricane Ian.

In 2022, economic losses amounted to $286 billion while the bill for insurers reached $133 billion.

Losses for insurers, however, exceeded the $100 billion mark for the fourth year in a row, “several records having been broken”, particularly concerning the costs generated by “severe storms”, underlined Jérôme Jean Haegeli, the chief economist of Swiss Re, during a press conference in Zurich.

Damage to solar panels

Last year, insured losses for storms totaled $64 billion, particularly due to the hailstorms that accompany them.

While the majority of these losses come from the United States, they are increasing in Europe, where the bill for storms has exceeded $5 billion per year over the past three years. The risk of hail in particular is increasing in Germany, Italy and France.

The reinsurer notes, among other things, an increase in costs for damage to solar panels. With their proliferation on roofs, costs are also increasing, as shown by the hailstorms that hit Italy in July.

In the event of a hailstorm, the damage that insurers must cover is “much more expensive than for roofs”, if only because damaged solar panels “cannot be repaired and must be replaced”, explained Balz Grollimund, head of earthquakes and disasters at Swiss Re.

The most used models are designed to withstand 25 millimeter hailstones, but a 19 centimeter hailstone, the largest ever recorded in Europe, was discovered during the storm in Italy, he pointed out.

In 2023, the earthquake in Turkey and Syria was the costliest natural disaster of 2023. Insured losses amounted to $6.2 billion, with this earthquake “dramatically” illustrating the coverage gaps in the world, underlines the report.

Economic losses reached $58 billion, but the earthquake hit poorly insured areas, with around 90% of losses not covered, the study quantifies.

The reinsurer highlights “a new record” in the number of so-called “medium-sized” catastrophes which result in insured losses of around 1 to 5 billion dollars. Their number is increasing twice as fast as other disasters, according to this study.

Last year, 142 catastrophes resulting in insured losses were recorded, including 30 resulting in losses of $1 billion to $5 billion, significantly higher than the average of 17 events of this magnitude over the past ten years.