Global insured losses from severe thunderstorms have hit a new all-time high of $60 billion in 2023, with overall natural catastrophe claims surpassing $100 million, according to Swiss Re Institute in a new report.

As the U.S. is particularly prone to such severe convective storms (SCS), due to its geographical location, U.S. claims dominated global insured losses for SCS activity in 2023 — at $50 billion — a record amount that is set to keep rising, said Swiss Re in its report on natural catastrophes.

The U.S. has experienced 18 events year to date, each of which caused insured losses of $1 billion and above.

Europe also has seen an increase in insured losses from severe thunderstorms: Italy was the most affected in 2023 as was France the year before. Italy experienced losses of more than $3.3 billion, the costliest natural catastrophe-related insured losses ever in Italy, said Swiss Re.

Losses from severe thunderstorms have steadily increased by 7 percent annually in the last 30 years, said Swiss Re, noting that 2023 marks an increase of almost 90 percent compared to the previous five-year average of $32 billion, and more than doubles the previous 10-year average of $27 billion.

“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,” commented Jérôme Jean Haegeli, Swiss Re’s group chief economist, in a statement.

Global natural catastrophes in the aggregate (which include SCS) will cost insurers more than $100 billion in 2023, said Swiss Re.

With insured losses of $6 billion, the earthquake in Turkey and Syria was the costliest natural catastrophe year to date, while the Morocco earthquake was the strongest earthquake to hit the country since 1900, Swiss Re continued.

The re/insurance industry covered roughly 40 percent of economic losses of $269 billion this year, indicating a large protection gap across the world, Swiss Re said. (The price tag for economic losses included $260 billion for natural catastrophes and $9 billion for manmade events.)

“For the insurance industry, recent events provide robust benchmarks for estimating the increasing loss trends. Nevertheless, to further progress the deeper understanding of this peril, it is important to get better insights from primary insurers on distributions of insured exposure and detailed claims data,” according to Balz Grollimund, head Catastrophe Peril. “It is equally important that insurance premiums adequately reflect the risk for the coverage provided especially also in light of increasing loss trends.”

Swiss Re said these loss estimates are preliminary and are subject to change as not all loss-generating events have been fully assessed.

Source: Swiss Re Institute