Global insured losses stemming from natural catastrophes in 2023 reached an estimated $123 billion, driven by a combination of non-peak perils and unprecedented weather and climate events, according to Gallagher Re’s annual Natural Catastrophe and Climate Report.
The report highlights that this marks the fourth consecutive year in which insured losses surpassed $100 billion, underscoring the increasing frequency and severity of such events worldwide. Notably, severe convective storms (SCS), classified as secondary perils, accounted for six of the top 10 costliest insured events, predominantly in the United States.
Of the total insured losses, private insurers covered $110 billion, with public insurance entities covering the remaining $13 billion. The global economic cost of all natural perils, including uninsured losses, was estimated at a staggering $357 billion, marking the eighth consecutive year in which global losses exceeded $300 billion.
When focusing solely on weather and climate events, excluding seismic events, insured losses amounted to $116 billion, with economic costs reaching an estimated $301 billion. Gallagher Re’s Chief Science Officer, Steve Bowen, emphasized the growing complexity and multifaceted challenges faced by the re/insurance industry in managing and mitigating natural catastrophe risk.
Severe Convective Storms emerged as the primary driver of losses in 2023, constituting approximately 58% of global insured losses, totaling a record-setting $71 billion, with the United States bearing the brunt with $60 billion in losses. Bowen stressed the evolving significance of non-peak perils like SCS, underscoring the need for a nuanced approach to risk assessment and management.
The report also sheds light on the significant protection gap evident in the aftermath of natural disasters. While events like the February earthquake sequence in Turkey and Syria incurred economic losses of $46.2 billion, insurance coverage amounted to only $6.1 billion. This underscores a worldwide protection gap of 66%, with events like the Marrakech-Safi earthquake in Morocco, Typhoon Doksuri in China, and Hurricane Otis in Mexico contributing to this disparity.
Furthermore, 2023 witnessed numerous records, including 66 individual billion-dollar economic loss events and 34 individual billion-dollar insured loss events globally. The year was also marked by record-breaking temperatures, with 2023 ranking as the warmest year on record since 1850, exacerbating conditions conducive to severe wildfire seasons, such as that experienced in Canada.
Hurricane Otis in Mexico and Typhoon Doksuri in China emerged as notable events, with Hurricane Otis becoming the costliest insured event in Mexico’s history, while Typhoon Doksuri posed significant economic challenges to mainland China.
