Global Insured Damages from Natural Disasters Set to Double in a Decade, Swiss Re Report Warns – South Asia Time

Global Insured Damages from Natural Disasters Set to Double in a Decade, Swiss Re Report Warns

 March 26, 2024  

London — The Swiss Re Institute, a leading research arm of the reinsurance industry, issued a stark warning on Tuesday, revealing that insured damages inflicted by natural catastrophes are on track to double within the next decade. According to the report, if current trends persist, policyholders around the world could face significant financial repercussions, with premiums expected to rise in response to heightened risk.

Jerome Jean Haegeli, Swiss Re’s chief economist and lead author of the report, emphasized the urgency of the situation, stating, “Premiums have to move in line with this risk.” Insured losses from natural catastrophes have been steadily rising, with last year marking the fourth consecutive year of surpassing $100 billion in damages, despite a slight decrease from previous years.

Historically, major hurricanes like Harvey and Katrina have driven global insured damages past the $100 billion mark. However, recent years have witnessed a surge in smaller events, particularly severe thunderstorms, causing widespread destruction. The devastating earthquake in Turkey and Syria last February, claiming thousands of lives, resulted in insured damages of approximately $6.2 billion, highlighting the vulnerability of regions with low insurance penetration.

In contrast, 2023 saw a record $60 billion in losses from 18 thunderstorms, with the United States bearing the brunt of the damage due to its relatively high insurance coverage. Severe Convective Storms (SCS), characterized by sudden downpours, fierce winds, and hailstones, have been increasing by about 7 percent annually for the past three decades.

The report underscores the link between rising temperatures and the proliferation of thunderstorms, fueled by planet-warming greenhouse gas emissions. Bernadette Woods Placky, chief meteorologist at Climate Central, explained, “Thunderstorms thrive in a warm, moist environment,” highlighting the growing impact of climate change on weather patterns.

Swiss Re identifies inflation, population growth in high-risk areas, and changing behaviors such as the increased use of solar energy as contributing factors to the rise in thunderstorm damage. Aging rooftops hosting solar power systems are particularly vulnerable to hail damage, exacerbating losses.

As insurers grapple with the mounting costs of natural disasters, the report serves as a stark reminder of the urgent need for adaptation and mitigation measures to address the escalating risks posed by climate change. Without decisive action, the economic toll of natural catastrophes is poised to escalate, threatening the resilience of communities worldwide.