Severe Thunderstorms Cause Record $60 Billion Insured Losses in 2023

Insured losses from severe thunderstorms hit a record $60 billion in 2023, contributing to the fourth consecutive year of losses exceeding $100 billion, according to Swiss Re Institute.
By: | December 12, 2023

Insured losses from severe thunderstorms reached a record high of $60 billion in 2023, according to estimates from the Swiss Re Institute.

The high frequency of low to medium-severity events has led to an aggregate of insured losses exceeding $100 billion for the fourth consecutive year. This is the first time that severe thunderstorms have caused such a significant loss for the industry. The (re)insurance industry covered approximately 40% of the economic losses, which amounted to $269 billion, indicating a substantial protection gap worldwide.

Losses from severe thunderstorms have steadily increased by 7% annually over the last 30 years. This year marks a nearly 90% increase compared to the previous five-year average of $32 billion and more than doubles the previous 10-year average of $27 billion. The U.S., in particular, saw insured losses from severe thunderstorms exceed $50 billion for the first time due to its geographical location. Europe, especially Italy, also experienced a significant increase in insured losses from severe thunderstorms.

Swiss Re’s Group chief economist, Jérôme Jean Haegeli, stated, “The cumulative effect of frequent, low-loss events, along with increasing property values and repair costs, has a big impact on an insurer’s profitability over a longer period. The high frequency of severe thunderstorms in 2023 has been an earnings’ test for the primary insurance industry.”

Balz Grollimund, head of catastrophe perils, added, “For the insurance industry, recent events provide robust benchmarks for estimating the increasing loss trends. It is important to get better insights from primary insurers on distributions of insured exposure and detailed claims data.”

The earthquake in Turkey and Syria was the costliest natural catastrophe of 2023, with insured losses of $6 billion. Urban development, wealth accumulation in disaster-prone areas and inflation are key factors contributing to the ever-rising natural catastrophe losses. With 2023 expected to be the warmest year on record, the effects of climate change are becoming increasingly apparent. &

The R&I Editorial Team can be reached at [email protected].

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