Globally, insurance and reinsurance industry losses from natural catastrophes hit $35 billion in the first half of 2022, which is 22% higher than the average for the past decade, according to the Swiss Re Institute.
Floods and other secondary perils continued to wreak havoc in the opening six months of 2022, and combined with man-made events, drove an estimated $75 billion in global economic losses from catastrophes in the period.
In terms of total losses, the $75 billion reported by Swiss Re is down on last year’s $95 billion and 7% lower than the previous ten-year average of $80 billion.
But in terms of insured losses, which rises to $38 billion for H1 2022 once $3 billion of man-made catastrophe losses are included, the figure is up on the previous ten-year average by 11%, although lower than the $49 billion seen in H1 2021.
“The effects of climate change are evident in increasingly extreme weather events, such as the unprecedented floods in Australia and South Africa. This confirms the trend we have observed over the last five years, that secondary perils are driving insured losses in every corner of the world,” said Martin Bertogg, Head of Catastrophe Perils at Swiss Re. “Unlike hurricanes or earthquakes, these perils are ubiquitous and exacerbated by rapid urbanization in particularly vulnerable areas. Given the scale of the devastation across the globe, secondary perils require the same disciplined risk assessment as primary perils such as hurricanes.”
Looking at individual events, Swiss Re highlights the torrential rains and widespread flooding in Australia in February and March, which set a new record for flood losses in the country at close to $3.5 billion, so far. This event has actually become one of the costliest natural catastrophes ever in the country for insurers, and in terms of re/insured losses, is the costliest event globally in H1 2022.
Flooding also occurred in South Africa, India, China, and Bangladesh in H1 2022, which Swiss Re says further confirms the growing loss potential from floods in urbanized regions.
In France, Swiss Re, citing data from the French Federation of Insurance Companies, says that severe weather, including hailstorms and heavy rain, so far caused estimated insured losses of €4 billion.
Elsewhere in Europe, two severe summer heatwaves led to record-high temperatures that ignited destructive forest fires across the southwest of the continent. Swiss Re notes that the global average temperature for June 2022 was some 0.3°C above the 1991-2020 average, making it the third warmest June on record.
The global reinsurer warns that as the warming climate is poised to exacerbate droughts, the likelihood of wildfires rises, ultimately causing greater damage where “rapid urban sprawl overlaps the wildland-urban interface.”
Jérôme Jean Haegeli, Swiss Re’s Group Chief Economist, commented on the findings: “Climate change is one of the biggest risks our society and the global economy is facing. With 75% of all natural catastrophes still uninsured, we see large protection gaps globally exacerbated by today’s cost-of-living crisis. Partnering with the public sector, the insurance industry is critical for strengthening society’s resilience to climate risks, by investing in and underwriting sustainable infrastructure.”
The estimates from Swiss Re follow that of Munich Re, who reported last week that insured losses from natural disasters totaled $34 billion in H1 2022, after re/insurance broker Aon had released an estimate of $39 billion.