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Rank 3: Natural catastrophes

Expert risk article | January 2024
After slipping down the rankings, nat cat has once again gained priority statusÌıafter a year of headline events, many of them taking a terrible toll on human lifeÌıand incurring record-breaking insurance losses.
The most important corporate concerns for the year ahead, ranked by 3,069 risk management experts from 92 countries and territories.

Devastating earthquakes, catastrophic floods, record-breakingÌıwildfires, and severe convective storms (SCS)Ìıhave shunted natural catastrophe three places up the riskÌıradar for 2024.

The year’s costliest nat cat events were the M7.8 and M7.5Ìıearthquakes that struck Turkey and Syria in February,Ìıcausing insured losses of over $6bn, as well as a tragic lossÌıof human life [1].

Total economic losses from nat cat in 2023 are estimatedÌıto be $260bn, according to analysis by Swiss Re. A highÌınumber of low-to-medium-severity events added upÌıto insured losses that will exceed $100bn for the fourthÌıconsecutive year, with SCS the main contributor. OftenÌıreferred to as a ‘secondary’ peril, SCS resulted in insuredÌılosses that reached an all-time high of $60bn in 2023 –Ìıalmost 90% more than the previous five-year average ofÌı$32bn. The US, which is particularly prone to such storms,Ìıexperienced 18 events that each incurred insured lossesÌıof $1bn and above, with total insured losses for SCSÌıexceeding $50bn for the first time [2].

Around the world, nat cat was the #1 risk in Croatia,ÌıGreece, Hong Kong, Hungary, Malaysia, Mexico, Morocco,ÌıSlovenia, and Thailand, and ranked in the top three forÌımany countries, such as the US, the UK, Australia, Japan,Ìıand Turkey.

“It’s no surprise most of the countries which rank the riskÌıof natural catastrophes and the related peril of climateÌıchange the highest are those that sustained some of theÌımost significant events of the year,” says Mabé VillarÌıVega, Catastrophe Risk Research Analyst, 91ÌƲ®»¢ÌıCommercial. “The increasing influence of changingÌıclimate conditions boosted the development of certainÌıevents in 2023, and nat cat is now the cause of businessÌıinterruption businesses fear the most (44% of responses)Ìıafter cyber incidents.”

2023 is believed to be the hottest year on record, withÌıheatwaves or droughts afflicting areas of southern Europe,Ìıthe US, Canada, Central and South America, NorthÌıAfrica, and Asia. Sustained dry conditions intensified andÌıcontributed to the spread of wildfires in many regions,Ìıincluding Canada, which recorded its most destructiveÌıwildfire season, and Greece, where a wildfire near the cityÌıof Alexandroupolis became the largest in the EuropeanÌıUnion’s recorded history. In Maui, Hawaii, the deadlyÌıLahaina wildfire is estimated to have caused economicÌılosses of $5.5bn, with insured losses of $3.4bn [3].

Ìı Ranking history globally:

  • 2023: 6 (19%)
  • 2022: 3 (25%)
  • 2021: 6 (17%)
  • 2020: 4 (21%)
  • 2019: 3 (28%)
Ìı Top risk in:
  • Croatia
  • Greece
  • Hong Kong
  • Hungary
  • Malaysia
  • Mexico
  • Morocco
  • Slovenia
  • Thailand

Elsewhere, catastrophic flooding was recorded in manyÌıregions, including Hong Kong, China, India, Libya, theÌıGreat Lakes of East Africa, Slovenia, and Italy. HeavyÌırainfall in Italy’s Emilia-Romagna region racked up insuredÌılosses of $600mn, making it the costliest weather-relatedÌıevent in the country since 1970 [4]. In the US, a series ofÌı‘atmospheric rivers’ – regions in the atmosphere that carryÌıwater – brought heavy rain to California, Nevada, Arizona,Ìıand Utah between January and March, with economicÌılosses estimated at over $3.4bn [5].

Exceptionally warm sea surface temperatures in theÌıNorth Atlantic led to an above-average hurricane season,Ìıdespite initial forecasts pointing to more subdued activityÌı– 20 named storms meant this was the fourth highestÌıtotal in a year since 1950 [6]. Hurricane Idalia was the mostÌısignificant event, registering insured losses of $3.5bn [7].

The effects of the El Niño climate pattern contributedÌıto intensified tropical cyclone activity in the WesternÌıNorth Pacific, the most significant event being TropicalÌıCyclone Doksuri, which caused economic losses of $20bnÌıin mainland China [8]. In the eastern Pacific, Tropical StormÌıHilary affected California and Mexico, while Hurricane OtisÌıcaused widespread damage to Acapulco in Mexico.

A series of hailstorms in July set a record for the largestÌıEuropean hailstone – 19cm in Italy – during a number ofÌıextreme-weather events believed to have caused $1.1bnÌıinsured losses and $4bn economic losses [9]. “Hailstorms areÌıdeemed a secondary peril, but they are intensifying and canÌıdrive severe losses,” says Villar Vega. “In August, HailstormÌıDenis in southern Germany damaged roofs, windows andÌıeven the interiors of many properties (insured losses fromÌıthis event were estimated at $230mn [10]).

“Nat cat events, particularly those related to weather andÌıclimate, are expected to increase and therefore they willÌıhave an impact on the insurance industry, from modelÌıupdates to pricing and underwriting strategies. ResilienceÌıand business continuity plans must be prioritized for 2024,”ÌıVillar Vega concludes.

The aftermath of Hurricane Idalia, Florida

[1]ÌıSwiss Re, Insured losses from severe thunderstorms reach new all-time high of USD 60 billion in 2023, SwissÌıRe Institute estimates, December 7, 2023
[2] Swiss Re, Insured losses from severe thunderstorms reach new all-time high of USD 60 billion in 2023, SwissÌıRe Institute estimates, December 7, 2023
[3] Gallagher Re, Natural Catastrophe Report, October 2023
[4] Swiss Re, Severe thunderstorms account for up to 70% of all insured natural catastrophe losses in first halfÌıof 2023, Swiss Re Institute estimates, August 9, 2023
[5] Gallagher Re, Natural Catastrophe Report, October 2023
[6] National Oceanic and Atmospheric Administration, 2023 Atlantic hurricane season ranks 4th for most-namedÌıstorms in a year, November 28, 2023
[7] Moody’s RMS, Moody’s RMS estimates US$3 billion to US$5 billion in private market insured losses fromÌımajor hurricane Idalia, September 4, 2023
[8] Gallagher Re, Natural Catastrophe Report, October 2023
[9] Gallagher Re, Natural Catastrophe Report, October 2023
[10] Süddeutsche Zeitung, Hagelsturm “Denis”: Schäden noch viel höher als angenommen, November 23,

Pictures: Adobe Stock

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