In 2023, the world experienced 142 natural disasters. “Insured losses could double within the next ten years,” predicts Swiss Re.
Climate change is leaving its mark on insurance companies’ balance sheets. “The risk of hail in particular is increasing, especially in Germany, Italy and France,” reported the Swiss reinsurer Swiss Re in Zurich.
The number of extreme weather events rose to record levels in 2023. The company recorded 142 natural disasters, up from 114 the year before. However, the insured losses were significantly lower than in 2022: They amounted to 108 billion dollars (around 100 billion euros) in 2023, after inflation-adjusted 133 billion dollars in the previous year. In 2022, Hurricane Ian in particular caused high damage in Florida.
Higher insurance premiums alone cannot cover risk
As temperatures rise, extreme weather events become more frequent and severe, Swiss Re reported. The damage is increasing primarily because the economy and population are growing, because more people are moving to cities that are sometimes at risk and there is more valuable infrastructure and material there than before. Swiss Re cited the sharp increase in solar systems on roofs as an example.
Higher insurance premiums alone could not cover the risk. The potential for damage must be reduced through adaptation measures, such as the construction of flood protection systems. Areas that are vulnerable to natural hazards should not be populated.
Most serious natural disaster in 2023: earthquake in Turkey
The reinsurer estimates “that in view of rising temperatures and increasingly frequent and severe extreme weather events, insured losses could double within the next ten years.” That would correspond to an annual increase of a good seven percent and would be roughly at the upper level of increases since 1994. Since then, damage has increased by five to seven percent per year.
According to this analysis, the most serious natural disaster in 2023 was the earthquake in Turkey and Syria in February, with insured losses estimated at $6.2 billion. This was mainly due to damage caused by severe thunderstorms, tornadoes or hailstorms. This category caused record insured losses, totaling $64 billion. The USA accounted for 85 percent of this, but the highest increase in this category was in Europe.
Source: Stern
