Severe convective storms cause $50 billion worth of insured damage
Global insured losses from natural disasters nearly cost $90 billion through the first nine months of the year, a report by Aon has revealed.
More than 60% of global insured losses were caused by severe convective storms, which passed the $50 billion mark for the first time.
Aon said that in contrast to most years when tropical cyclones and floods were responsible for most losses, “earthquakes and severe convective storms were responsible for more than 60% of total economic losses in 2023”.
“Insured losses from severe convective storms in the United States continued to increase due to relentless activity and surpassed the $50 billion mark for the first time on record, accounting for roughly 60% of all global insured losses,” the report said. “Another significant event for the industry was the wildfire that destroyed the town of Lahaina in Hawaii.”
The report said global insured losses from natural disaster events had reached $88 billion by the end of the third quarter – 17% higher than the 21st century annual average, and driven by notable third quarter events such as US and Italian SCS, and the Maui wildfire – one of the deadliest and costliest wildfires in US history.
“Year-to-date economic losses totalled $295 billion, compared to a 21st century annual average of $310 billion,” the report said. “The aggregated death toll from 2023 natural catastrophe events had breached 75,000 during the same period, making 2023 the deadliest year since 2010.”
The death toll was largely driven by earthquakes, with several significant and deadly events in the third quarter – most notably the catastrophic flash flooding in northeastern Libya, which was a result of rainfall released by Storm Daniel and following infrastructural failures. The September earthquake in Morocco currently ranks as the third deadliest event of the year with nearly 3,000 fatalities.
“In Q3 alone, there were at least four individual billion-dollar insured loss events for SCS in the US, which will likely increase to seven events due to continued loss development.
“For the first time, insured losses from SCS in the US surpassed $50 billion and accounted for 60% of global insured losses. The peril also resonated in Europe, which endured two individual billion-dollar SCS events, including Italy recording its first billion-dollar SCS insurance loss.”
Aon said Other notable natural hazard events that took place during the third quarter included:
· Widespread flooding in Beijing and several Chinese provinces in early August resulted in the costliest global economic loss event of Q3.
· On September 8, a magnitude-6.8 earthquake occurred in the Moroccan High Atlas Mountain range, claiming nearly 3,000 lives, injuring more than 5,600 people, and causing significant material damage across the affected area.
· The destructive flash flooding in northeastern Libya in early September damaged thousands of buildings in Derna city and ranked as the second deadliest event of the year, with more than 4,300 fatalities.
· Hurricane losses in the US were lower than average in the third quarter, which is considered the peak of the Pacific and Atlantic hurricane seasons. Two notable tropical systems, Hilary and Idalia, still caused significant losses that, collectively, reached into billions of dollars.
Michal Lorinc, head of Aon's Catastrophe Insight, said: "Global natural catastrophes killed many people and caused significant structural and economic damage during the first nine months of 2023.
“Wildfire and Severe Convective Storm were once again highly prominent, and Aon's research reveals that both are becoming increasingly costly to insurers, communities and governments. In the US, around 80% of SCS loss growth can be explained by exposure change – highlighting the need for insurers to understand underlying exposures in their portfolios."