2024-01-09 08:17:13
No devastating hurricane, no expensive flash flood – and yet, according to calculations by Munich Re, natural disasters in 2023 caused $250 billion (€228 billion) in damage. “Last year’s loss balance was comparable to previous years. What is remarkable, however, is that this came about without a single event with an insured loss of more than ten billion dollars,” said the chief climate scientist of the world’s largest reinsurer, Ernst Rauch.
In 2022, Hurricane “Ian” alone caused damage worth $100 billion, of which insurers paid $60 billion. Last year, severe weather and severe thunderstorms with hail dominated the natural disaster record, especially in North America and Europe. They alone caused $76 billion in damage, $58 billion of which was insured. “We have to prepare for such levels of damage,” warns Rauch. “Damage events that were previously viewed as secondary have now become an important loss driver.” The reinsurers who insure primary insurers against such catastrophes would also have to take this into account in their prices.
For Rauch, climate change is also to blame for the extreme weather. By the end of November, global temperatures in 2023 were 1.3 degrees above the value from the period between 1850 and 1900. “Global warming, which has been accelerating for years, is increasing weather extremes in many regions and thus the potential for damage. At higher temperatures, more water evaporates, and with it “The additional moisture in the atmosphere increases the potential energy for severe storms,” says the climate expert. This also explains the recent floods in Lower Saxony. “Christmas floods have happened more often in Germany,” says Rauch. “However, winter precipitation in Central Europe has been increasing for decades, while it is decreasing in summer.”
Rauch focuses on prevention, for example in construction. Otherwise there would be a risk of rising prices for residential property policies. “As risks grow, so do the costs of insuring them.” This is also a social issue, says the researcher at Munich Re (Munich Re). “But I think it is very unlikely that as a homeowner in Germany you will no longer be able to afford natural disaster protection in the foreseeable future,” he gives the all-clear. The premiums are usually in the low three-digit sums per year. For comparison: In hurricane regions such as Florida, the premiums can be between $5,000 and $7,000.
The costliest natural disaster of the year was also the deadliest: the earthquakes in Turkey and Syria. 58,000 people died. Of the approximately $50 billion in damage to houses, roads and bridges, only $5.5 billion was covered by insurance policies, even though there is compulsory insurance for residential buildings in Turkey. A total of 74,000 people lost their lives in natural disasters in 2023, more than ever since the 2010 earthquake in Haiti. Overall, natural catastrophe losses in 2023 were at the average level of the past five years at $250 (2022: 250) billion, and insured losses at $95 (2022: 125) billion were even 10 billion below the five-year average.
The insurers were also lucky: One of the most severe hurricanes, “Idalia”, hit a sparsely populated region in Florida, while many others did not reach the mainland. And in many regions of the world, the insurance density is low: In the typhoon “Doksuri” in China, Vietnam and the Philippines, only two billion dollars were left with insurers – with a total loss of 25 billion. Hurricane “Otis” caused $12 billion in damage to the Mexican seaside resort of Acapulco, among other places, only a third of which was insured.
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