Global insured nat cat losses rise to $140bn: Gallagher Re
Yet again, the insured natural catastrophe losses surpassed the $100 billion threshold last year at a massive $140 billion, bringing into focus the need to better account for the growing risks and mitigate these hazards on a global scale.
According to Gallagher Re’s 2022 Natural Catastrophe Report, it’s the fifth year since 2017 that losses have passed the milestone.
“The year featured another series of costly, consequential, and record-setting natural catastrophe events around the world that again brought into focus the need to better account for the growing risks these hazards bring,” the global reinsurance broker noted.
Private insurers covered most of the losses ($125bn), with public insurance picking up the remainder. A significant amount of losses also remained uninsured.
“The financial cost of natural hazards continues to increase, and we are further recognising that a consistently high global protection gap – 61% in 2022 – means that much more opportunity exists to help people prepare before and after a disaster occurs,” said Steve Bowen, chief science officer at Gallagher Re.
“As catastrophe losses grow more expensive, we again look to the connected nature of climate change, exposure growth, and social inflation as important issues enhancing eventual loss costs. The increase in severity, and in some cases the frequency of ‘secondary’ peril events, presents re/insurers with a multi-faceted and complicated challenge when it comes to risk protection and mitigation.”
Losses in the US were led by those related to Hurricane Ian. The storm is likely to result in a minimal $55bn loss for public and private insurance entities, and an overall economic loss of $112bn in the US alone, the broker estimates – making it one of the costliest natural disaster events ever recorded globally. Drought also resulted in $9bn in crop insurance indemnity payouts, and three severe convective storm (SCS) outbreaks resulted in a multi-billion-dollar insured loss alone.
Outside the US, the costliest event was Pakistan’s prolific seasonal monsoon flooding. A report from the World Bank cited a $15bn direct physical damage economic loss, while the country’s National Disaster Management Authority cited 1,739 fatalities, 2.3 million homes damaged, and 33 million people affected across 90 districts. Historic flooding also impacted several regions of Africa, notably in Nigeria and South Africa, where each country’s insurance industry faced one of its costliest natural catastrophe events on record. Record-setting rainfall in parts of Eastern Australia, meanwhile, contributed to nearly $5bn in payouts.
Other events recorded in the report include the record summer heatwaves in Europe; a powerful March offshore earthquake in Japan; record-setting SCS activity in France; extensive drought conditions across South America, Europe, and parts of Asia; typhoon landfalls in Japan and the Philippines; Hurricane Fiona landfalls in Puerto Rico and Canada; multiple strong European windstorm vents to wrap the 2021-2022 season; and an intense May derecho in Canada.
“The fingerprints of climate change were visible on virtually every major weather and climate event in 2022, once again highlighting the urgency to implement proper planning and investment strategies that will limit the risk to life and property. The implications of climate change on daily weather and climate events continues to be more evident and better understood,” Bowen concluded.
“While we are still trying to account for uncertainties that exist in how climate change may influence events on a regional and per peril basis, it is clear that impacts from the phenomenon are not future tense. They are already being felt today.”
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