Overall costs are stable, but storms are increasingly destructive. In 2023, natural disasters caused around $250 billion (€228 billion) in damages, unchanged from the previous year, according to estimates published by Munich Re on Tuesday, January 9.
Insured losses alone have fallen by almost a quarter, to $95 billion compared with $125 billion in 2022, according to the German group, the world's leading reinsurer. Insurance companies pay reinsurers premiums to cover a proportion of their risks.
This large gap between total losses and insured losses is largely explained by the location of the most costly disasters last year. The series of earthquakes that struck Turkey and Syria in February 2023, killing some 58,000 people, caused around $50 billion in damages but only $5.5 billion was covered by an insurance policy.
Similarly, typhoon Doksuri, which hit the Philippines and then China in July – causing unprecedented rainfall of 600 millimeters in 24 hours in some areas – caused losses of around $25 billion, of which barely $2 billion was insured.
The difference is a little less spectacular for the damage caused in October by Hurricane Otis on Mexico's west coast, with $12 billion worth of damage, a third of which was insured. The hotels in the seaside resort of Acapulco, devastated in a matter of hours by the storm and winds that peaked at 265 kilometers per hour, were insured.
Apart from those differentials, Munich Re points out that the cases of Typhoon Doksuri and Hurricane Otis are consistent with the expected consequences of climate change, namely an increased frequency of intense storms accompanied by very heavy rainfall.
"Global warming, which has been accelerating for several years now, is intensifying extreme weather events in many regions, leading to an increase in potential losses. More and more water evaporates at higher temperatures, and the extra moisture in the atmosphere provides more energy for severe thunderstorms," said Ernst Rauch, Munich Re's head of climate science.
All in all, the storms of 2023 in Europe and North America were more destructive than ever, said Munich Re, with overall damage of $76 billion (including $58 billion in insured losses), an unprecedented toll in these two regions.
Joining this observation, another major reinsurer, Swiss Re, highlights in a study published in December 2023 the growing impact of severe convective storms – characterized by heavy rain, hail and strong winds – which have now reached an all-time high in terms of costs to the insurance industry.
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