Average annual Nat CAT losses to touch new high
Source: Asia Insurance Review | Oct 2023
The global modelled insured average annual loss from Nat CAT events is $133bn, a new high captured in the latest analysis using Verisk’s extreme event solutions models.
The latest edition of the 2023 Global Modelled Catastrophe Losses Report published by Verisk has said that not only should the insurance industry be prepared to experience total insured losses from natural catastrophes well in excess of $100bn every year, but annual losses greater than $200bn are also plausible. These values are up significantly over the decade.
Verisk president of extreme Bill Churney said, “The growth in exposure values, driven primarily by continued construction in high-hazard areas, and rising replacement costs – largely due to inflation – are the most significant factors responsible for increasing catastrophe losses.
Mr Churney said, “The other significant factor is the impact of climate change, which is often cited as the primary reason for the increase in losses. But, while this plays a role, year-over-year growth of exposure and rising replacement values have a far greater short-term impact.”
Losses from the hazards beyond the traditional peak perils of hurricanes and earthquakes, including flood, severe thunderstorm, and wildfire, now account for a much larger proportion of the overall annual losses, due to the combination of more frequent events and more valuable properties at risk.
Verisk has determined that the global insured losses only make up approximately a third of global economic losses. The company estimates that annual economic losses could exceed $400bn, a staggering figure that highlights the insurance protection gap that exists around the world. A