HANNOVER RE 
"The loss balance last year was comparable to previous years. What is remarkable, however, is that this was achieved without a single event with an insured loss of more than ten billion dollars. The background noise has become louder," said Ernst Rauch, chief climate scientist at the world's largest reinsurer, to the Reuters news agency. In 2022, Hurricane Ian alone caused losses of 100 billion dollars, 60 billion of which were borne by insurers.
Last year, storms and severe thunderstorms with hail dominated the natural catastrophe balance sheet, especially in North America and Europe. They alone caused 76 billion dollars in damage, 58 billion dollars of which was insured. "We have to be prepared for such levels of damage," warns Rauch. "Loss events that were previously regarded as secondary have become a major loss driver." Reinsurers, who insure primary insurers against such catastrophes, must also factor this into 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 the additional moisture in the atmosphere increases the potential energy for severe storms," says the climate expert. This also explains the recent flooding in Lower Saxony. "Christmas floods have happened more frequently in Germany," says Rauch. "However, precipitation has been increasing in Central Europe in winter for decades, while it decreases in summer."
Rauch focuses on prevention, for example in construction. Otherwise there is a risk of rising prices for residential building policies. "As risks increase, so do the costs of insuring them." This is also a social issue, says the Munich Re researcher. "However, I think it is very unlikely that homeowners in Germany will no longer be able to afford natural disaster cover in the foreseeable future," he says, giving the all-clear. Premiums are usually in the low three-digit range per year. By comparison, in hurricane regions such as Florida, premiums can range from 5,000 to 7,000 dollars.
58,000 DEAD IN EARTHQUAKES IN TURKEY AND SYRIA
The most expensive natural disaster of the year was also the deadliest: the earthquake in Turkey and Syria. 58,000 people died. Of the approximately 50 billion dollars in damage to houses, roads and bridges, only 5.5 billion was covered by insurance policies, although there is compulsory insurance for residential buildings in Turkey. In total, 74,000 people lost their lives in natural disasters in 2023, more than at any time since the 2010 earthquake in Haiti.
At 250 (2022: 250) billion dollars, total natural disaster losses in 2023 were at the average level of the past five years, while insured losses of 95 (2022: 125) billion dollars were even ten billion dollars below the five-year average.
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, insurance density is low: in the case of typhoon Doksuri in China, Vietnam and the Philippines, for example, insurers were left with only two billion dollars - out of a total loss of 25 billion. Hurricane Otis caused twelve billion dollars in damage in the Mexican seaside resort of Acapulco, among other places, only a third of which was insured.
(Report by Alexander Hübner, edited by Kerstin Dörr. If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).
