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Digital EditionGlobal Insured Losses in H1 Surge 25% Above 10-Year Average
The first half of 2024 saw global economic losses from natural disasters hit $128 billion, while insured losses totaled $61 billion, 25% higher than the decade’s average and largely due to an increase in severe convective storm (SCS) events in the U.S., according to an analysis by Gallagher Re.
As more claims are processed from first-half events both economic and insured figures are expected to rise, underscoring the growing financial impact of climate-related disasters.
The first half of 2024 saw six individual events that each resulted in economic losses greater than $5 billion, accounting for a staggering 37% of all economic losses during this period, Gallagher Re reported. Two of these events occurred in Asia, while the United States, Middle East, Europe, and Latin America each experienced one such event.
In total, there were at least 32 individual billion-dollar economic loss events globally in the first half of the year, surpassing the 10-year average of 27. The U.S. bore the brunt of these events, with 20 billion-dollar events occurring within its borders, including 14 SCS outbreaks. Asia experienced six billion-dollar events, Latin America had four, and the Middle East and Europe each had one. Notably, 30 of the 32 events were weather or climate-related, exceeding the 10-year average of 26, the report stated.
The lingering influence of El Niño played a significant role in many of the weather and climate-related disasters, according to Gallagher Re. Shifts in the jet stream led to periods of extreme precipitation or drought in parts of South America, Africa, Asia, and the Middle East, resulting in costly consequences.
The Middle East, particularly the United Arab Emirates, experienced exceptional flooding in mid-April, resulting in the region’s costliest weather-related economic cost on record, topping $8.5 billion. Similarly, flooding in Brazil’s Rio Grande do Sul state at the end of April and into May led to more than $8 billion in loss costs.
When breaking down the losses by peril, SCS was the most expensive, accounting for at least 41% of natural catastrophe economic losses in the first half of the year. The $53 billion in global SCS losses were 36% higher than the decadal average for the first half of the year. Flooding accounted for 30% of economic losses, while earthquakes were responsible for 12%, making them the only other perils that accounted for at least 10% of the total economic losses.
“As is now widely known and accepted, the insured costs associated with the U.S. SCS peril have continued to drive a greater portion of annual losses in recent years,” the report stated. “This is putting tremendous strain on national and regional primary insurance carriers who are increasingly forced to absorb most, if not all, of their claims payouts, given that a very small portion of losses are being cede to reinsurance.”
United States Accounts for Lion’s Share of Losses
The U.S. accounted for $59 billion, or 46%, of the global total of economic losses from natural catastrophes. This figure surpassed the country’s decadal average, with SCS, floods, and droughts being the primary culprits. As the year progresses, experts anticipate that losses from these perils will continue to mount.
The U.S. insurance industry was hit particularly hard, with U.S. losses responsible for more than $43 billion, or 70%, of the global insured loss total in the first half of the year. This, too, exceeded the region’s decadal average of $32 billion.
The U.S. experienced an astonishing 13 individual billion-dollar insured SCS outbreaks, eight of which surpassed the $2 billion mark, according to the report.
“Severe convective storm (SCS) losses in the U.S. continued to dominate global insured losses in H1, following a highly active period for the peril in late April and May. U.S. SCS accounted for 61% of global insured losses during the first six months of 2024,” Gallagher stated.
SCS proved to be the most devastating peril for the U.S., accounting for six of the top 10 costliest insured loss events globally in the first half of 2024. As reporting lags and claims processing continue, the expectation is that the U.S. losses will only further increase in the months ahead, cementing the country’s position as the primary driver of global economic and insured losses, Gallagher Re reported.
With $37 billion in first-half insured SCS losses in the U.S., that already makes it the fourth-costliest annual SCS insured total on record for the U.S., behind 2023 ($63 billion), 20202 ($45 billion) and 2011 ($41 billion), the report noted.
Hail was the primary sub-peril driving the bulk of the insured costs, but an above-average volume of tornadoes and non-tornadic wind occurrences also led to costly consequences.
Preliminary data from the National Oceanic and Atmospheric Administration (NOAA) showed that as many as 571 tornadoes were recorded in the U.S. in May, the report noted. If all were confirmed, this would surpass a previous record of 550 set in May 2003.
Billion-Dollar Insured Loss Events and Regional Breakdown
The first half of 2024 saw 19 individual billion-dollar insured loss events worldwide, marking the second highest total on record behind 2022 and 2023. Twelve of these events resulted in a multi-billion-dollar loss, with SCS being the costliest peril at $40 billion, mostly incurred in the U.S. Flooding was the only other peril that accounted for $10 billion or more in insured losses.
Non-U.S. events that resulted in a multi-billion-dollar impact for the insurance industry included Japan’s Noto Peninsula earthquake ($3 billion), Arabian Gulf Coast flash flooding in mid-April ($2.8 billion), Central Europe (Germany) flooding in late May and early June (>$2.1 billion), and Brazil (Rio Grande do Sul) flooding in late April and early May ($2.0 billion).
Weather and climate events drove 93% of H1 2024 insured losses, slightly lower than the H1 decadal average of 95%. However, as further loss development occurs from Q1/Q2 events, this percentage is expected to grow, especially with the traditional multi-month reporting lag for public insurance entity indemnity payout data associated with agriculture, the report noted.
View the full report on the Gallagher Re website. &
