Solutions to nat cat insurability spelled exclusively on 3P’s: Swiss Re

The trend in natural catastrophe losses invariably argues not only for further gains in insurance rates but a broad system of public-private initiatives in prevention and risk reduction if insurability is even to be maintained, top officials at Swiss Re reiterated alongside publication of another tally on 2023 cat losses. 

Public-private partnerships “are key to cope with the risk landscape that we are confronted with and that we expect in the future,” Ivo Menzinger,-Swiss Re's chief for EMEA public sector solutions, said in comment to publication of the Swiss Re Institute’s Sigma report on 2023 nat cats. 

Matching a frequent Swiss Re mantra, Menzinger claims such a comprehensive risk management approach is both “crucial for us to maintain insurability” and “a collective responsibility” in a situation in which “none of the stakeholders involved is good enough just yet” to go it alone. 

To the Swiss Re eye, a certain amount of climate change impacts are already baked into the upcoming insurance story and can’t be withdrawn from the calculus. 

“But some 65% of those future losses can be averted cost effectively,” Menzinger said the payoff of future savings against current mitigation and resilience investment costs. 

Comments followed presentation of a $117 billion insured loss price tag for 2023, including $108 billion from nat cats, down on the prior year, but some 50% above the 10-year average and the fourth consecutive year above the $100 billion mark. 

“Looking ahead, we expect it to continue,” Swiss Re's chief economist Jérôme Haegeli said of an outlook for 5-7% annual growth in the figure. 

With an economic outlook of higher inflation and lower economic growth, the nat cat problem, and its kick-on implications for nat cat insurability, is accelerating even faster. 

“It took 30 years for nat cat losses to double,” Haegeli said of losses as a portion of GDP. “If you look ahead it, will take 10 years”. 

2023 will stand out for having neared an exponential trend line of nat cat losses without having had much by way of major events. 

“Above all, 2023 stands out as the record high losses from severe convective storms,” Haegeli said. 

While the US continues to stand out on the severe convective storm rankings, Europe is rising faster, Haegeli notes. A $5.5 billion price tag in Italy didn't just set a new record, it smashed a record that had previously been set at a mere $200 million. 

Climate change may be a factor, but “is not the key driver” for severe convective storm losses, Haegeli said. His eyes have been turned more towards inflation, construction costs, urbanization and wealth build-up in risk zones.  

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