'High time to invest in more climate adaption': Insurers Lose $50bn in Natural Catastrophes in 2023
The global insurance industry has been sorely impacted by the climate crisis, suffering a staggering $50bn loss in the first quarter of the year due to devastating thunderstorms, earthquakes, floods, and heatwaves. According to a recent study, this is the worst start to a year for the industry since 2011.
Swiss Re, a reinsurance group, published data that showed that a wave of destructive convective storms in the United States caused an astounding $35 billion in insured losses, which accounts for nearly 70 percent of the worldwide total.
Insured losses due to the ten significant storms in the past six months have each caused losses of more than one billion dollars, setting a new record for such occurrences.
Swiss Re reports that the earthquake in Turkey and Syria incurred the highest economic and insured losses of all disasters, amounting to an estimated $5.3bn.
In addition, New Zealand experienced its most significant two weather-related insurance losses since 1970, totaling $2.3 billion, while there was heavy rainfall in northern Italy in mid-May that caused substantial flooding and projected insurance losses of over $600 million.
In early July, the US, north-western China, and southern Europe suffered from intense heatwaves, further heightened by arid weather conditions and strong winds. This combination of unfavorable conditions has caused wildfires to spread across various Greek islands, Italy, and Algeria. Swiss Re commented that it is too soon to gauge the total damages from the fires. However, it did add to the apprehension that considerable weather-related losses will persist into the latter half of the year.
For the first half of this year, insured losses due to the intensifying climate-related severe weather events have nearly reached twice the $18.4bn average for the last decade.
Swiss Re's Group Chief Economist Jerome Jean Haegeli declared that safety measures must be implemented to ensure that high-risk properties can still be insured reasonably. He remarked, "The time to invest in climate adaptation is now. We can already observe the consequences of climate change in certain natural disasters such as heatwaves, droughts, floods, and excessive precipitation."
Urbanization into wild spaces, coupled with land use arrangements in regions at risk of coastal and riverside damage, create a challenging mix of valuable exposure in hazardous conditions - a situation that may be difficult to reverse - aside from the effects of climate change.
Hiscox, an insurer part of the FTSE 100, reported that the cost of natural catastrophe reinsurance in North America had risen 43% from the previous year in response to the increasing expenses inflicted by natural disasters.
By the first six months of 2023, the financial impact caused by natural disasters had reached $120 billion, almost doubling the 10-year average. This figure was only a mere $3 billion away from the sum of losses in the entire year of 2022.