Re/insurers hit hard by ‘significantly above average’ losses in 2022: Munich Re
Insured losses were “significantly above average” in 2022 – yet again exceeding the $100 billion mark – with Hurricane Ian responsible for more than a third of overall losses and roughly half of the insured losses worldwide, the latest figures from one of the world’s largest reinsurers, Munich Re, have revealed.
Global catastrophes in 2022 drove overall losses of around $270 billion, of which roughly $120 billion were covered by re/insurance. The total losses were close to the average for the last five years, while insured losses were significantly above average, according to Munich Re.
More than a third of overall losses and roughly half of insured losses globally came from Hurricane Ian, causing a damage of around $100 billion, of which $60 billion was insured (not including NFIP). When adjusted for inflation, Ian was the second-costliest tropical cyclone on record after Hurricane Katrina in 2005.
For insurers, the second-costliest single natural disaster in 2022 was flooding in the southeast of Australia in February and March, resulting in overall losses of approximately $6.6 billion, just under $4 billion was insured.
“Climate change is taking an increasing toll,” said Thomas Blunck, member of Munich Re’s board. “The natural disaster figures for 2022 are dominated by events that, according to the latest research findings, are more intense or are occurring more frequently. In some cases, both trends apply.
“Another alarming aspect we witness time and again is that natural disasters hit people in poorer countries especially hard. Prevention and financial protection, for example in the form of insurance, must therefore be given higher priority.
The continued high level of insured losses is impacting insurers at a time when they are having to deal with both high inflation rates and a shrinking capital base due to rising interest rates, management noted in its report. In contrast, the positive effect on investments from higher interest rates will only come in time, it added.
Ernst Rauch, chief climate scientist at Munich Re, further explained: “Two factors should be kept in mind when considering the 2022 natural disaster figures. Firstly, we are experiencing La Niña conditions for the third year in a row. This increases the likelihood of hurricanes in North America, floods in Australia, drought and heatwaves in China, and heavier monsoon rains in parts of South Asia. At the same time, climate change is tending to increase weather extremes, with the result that the effects sometimes complement each other.”
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