Severe Convective Storms are the leading cause of insured natural disaster losses in the first half of the year, according to Swiss Re.

 

According to Swiss Re, global natural disasters cost insurers $50 billion in the first half of 2022 (H1 2022: $48 billion), with severe convective storms accounting for the majority of the losses.

"Severe convective storms - storms associated with thunder, lightning, heavy rain, hail, strong winds, and sudden temperature changes - caused US$35 billion (nearly 70%) in insured losses worldwide in the first half of 2023," according to a research from the Swiss Re Institute.

"This means that insured losses [for severe convective storms] are nearly twice as high in a six-month period as the annual average of the last ten years (US$18.4 billion)," Swiss Re stated, highlighting the growing loss implications of secondary risks.

Natural disasters cost insurers $43 billion in the first quarter, above the 10-year average: Munich Re

Thunderstorms in the United States cost insurers US$34 billion, accounting for 68% of global insured natural disaster losses - the highest-ever insured losses in a six-month period. Swiss Re was added. According to the research, ten catastrophes in the United States produced losses of $1 billion or more, compared to an annual average of six disasters in the preceding ten years, with Texas being the most impacted state.

Other findings from the report were:

• Overall economic losses from natural disasters totaled US$120 billion in H1, compared to US$123 billion the previous year, representing a 46% increase above the ten-year average.

• The February earthquake in Turkey and Syria was the most expensive disaster in terms of both economic and insurance damages, with an insured cost of US$5.3 billion. According to the World Bank, the early estimate for economic losses is US$34 billion. (Total economic losses include both insured and uninsured losses).

• In the first half, total insured losses of US$50 billion were the second highest since 2011.

• In early 2023, New Zealand was devastated by two severe weather disasters, floods and Cyclone Gabrielle, which were the two most expensive weather-related insured loss occurrences in New Zealand since 1970. The total insured loss for the two catastrophes was projected to be $2.3 billion.

• Heavy rains in northern Italy's Emilia-Romagna region in mid-May caused significant flooding and estimated insured losses of more than US$600 million, making it the country's most expensive weather-related disaster since 1970. Economic damages were estimated to be $10 billion.

• Global man-made disasters cost insurers $4 billion in the first half of 2018, compared to $5 billion in H1 2022. In H1, the economic consequences of man-made disasters were $5 billion, compared to $6 billion in H1 2022.

"With severe thunderstorms as the main driver for above-average insured losses in the first half of 2023, this secondary peril becomes one of the dominant global drivers of insured losses," said Martin Bertogg, Swiss Re's head of Catastrophe Perils, in a statement.

"The above-average losses reaffirm a 5%-7% annual growth trend in insured losses, driven by a warming climate but, more importantly, rapidly growing economic values in urbanised settings around the world." "The cyclone and flood events in New Zealand in the first quarter of 2023 are testaments to the risk to today's large urban centres, continuing patterns observed in Germany flooding in 2021, and in Australia and South Africa in 2022," he added.

According to Jérôme Jean Haegeli, Swiss Re's group chief economist, the consequences of climate change are seen in more extreme weather events such as heatwaves, droughts, floods, and extreme precipitation.

"In addition to the effects of climate change, land use planning in more exposed coastal and riverine areas, as well as urban sprawl into wilderness areas, create a difficult-to-reverse combination of high value exposure in higher risk environments." Protective measures must be implemented in order for insurance products to stay affordable for such high-risk buildings. "It's past time to invest in more climate adaptation," Haegeli added.