Global insurance losses from natural disasters in 2023 reached $118 billion, economic losses $380 billion
Global insured losses from natural disasters during 2023 grew 31% above the 21st century average, surpassing $100 billion for the fourth year in a row. Insurance industry losses amounted to 118 billion dollars.
According to broker Aon’s 2024 Climate and Catastrophe Insight report, this is the fourth year in a row that insurance losses have exceeded the average, reflecting the growing impact of natural disasters on the global economy.
Aon estimates economic losses from natural disasters at $380 billion. In 2023, there were 398 natural events, 22% more than the 21st century average, leaving a gap in insurance coverage of 69%, underscoring the urgent need to expand insurance coverage. Including only weather-related natural disasters, the global total was close to the long-term and slightly below the 10-year average.
Munich Re’s estimate is different, worldwide natural disasters will cause losses of about $250 billion in 2023, with insured losses of $95 billion (previous year: $125 billion), according to the Largest Natural Disasters report. Total losses were in line with the five-year average, while insured losses were slightly below the average figure of $105 billion. Unlike previous years, analysts at Munich Re believe there have been no megadisasters in industrialized countries that have led to increased losses (such as Hurricane Ian in 2022, which caused $100 billion in total losses and $60 billion in insured losses US dollars).
The global protection gap widened to an average level in 2023, following the lowest gap on record in 2022. Significant regional differences still exist: most catastrophe losses are covered in the US, but most losses in EMEA, APAC and the Americas are still uninsured. This shows that the need for insurance protection is growing and will continue to be a challenge, but also a huge opportunity for certain regions.
The surge was caused mainly by large earthquakes and relentlessly strong convective storms in the United States and Europe. In 2023, the number of natural disasters with large losses reached an unprecedented level: 66 events with economic losses of $66 billion and insured losses of $37 billion. Earthquakes caused the greatest economic losses, while severe convective storms proved to be the most expensive for insurers. The most catastrophic event was the earthquake that occurred in Turkey and Syria in February.
Natural hazards in 2023 led to the tragic loss of 95,000 people worldwide, the highest number since 2010. Earthquakes and heat waves were the main causes of these casualties. 2023 was the deadliest year since 2010, when earthquakes claimed more than 64,000 lives. Numerous severe heat waves around the world have resulted in at least 16,500 heat-related deaths.
2023 was the hottest year on record with “unprecedented temperature anomalies” affecting 24 countries and territories. Extremely high temperature anomalies registered in many parts of the globe led to devastating consequences. This has become symbolic, while a number of other climate statistics have been rewritten against the background of the broader process of climate change. The behavior of many natural hazards continued to be influenced not only by the warming trend, but also by El Niño conditions throughout the year.
Many important events have highlighted the need for better disaster preparedness and planning to reduce risk, protect lives and increase resilience.
The 10 biggest global economic losses in 2023
10 largest global insurance losses in 2023
Insurers worldwide covered $118 billion, above the 21st century average ($90 billion) and the ten-year average ($110 billion). The drought in the US and the sequence of earthquakes in Turkey and Syria were the most expensive events to insure, considering both public and private entities. Although no single event reached the $10 billion mark, the total was at least $37 billion in losses, a new all-time high. This highlights the increasing frequency of medium-sized events, especially strong convective storms, and their impact on global losses.
New Zealand, Italy, Greece, Slovenia and Croatia recorded the most expensive weather-related insurance claims.
Insurance market participants emphasize the need for organizations to increase resilience in the face of growing climate risks and disasters. Insurers and reinsurers are emphasizing the collaborative efforts of the private and public sectors to accelerate innovation, protect vulnerable communities, and address the economic impact of extreme weather events.
Today, it is important to use forward-looking diagnostics to analyze climate trends and mitigate risks, especially in sectors such as construction, agriculture and real estate. The insurance industry plays a critical role in improving the financial resilience of communities and bridging the protection gap through innovative products. Consideration must also be given to the vulnerability of different communities to natural disasters such as earthquakes, which reveal problems with insufficient insurance and the need for well-maintained infrastructure and reliable warning systems in the face of deadly floods and fires.