The new normal: $100 billion in insured Nat Cat damages

LONDON, January 29, 2024 — For the fourth consecutive year 2023 saw a global insured loss exceeding US$100 billion, however with a total economic loss surpassing US$350 billion, it has become clear that the protection gap is ever present; such losses are becoming the norm, not the exception. This is according to the latest Natural Catastrophe Review released by WTW (NASDAQ: WTW), a leading global advisory, broking, and solutions company.

The review offers insight into recent events, lessons learned and the outlook for the future. From analysing the aftermath of 2023’s severe weather in the US and detailing North Atlantic hurricane activity in a changing climate, to exploring how the Panama Canal drought has disrupted global shipping, the review includes commentary from WTW experts and leading researchers from the WTW Research Network.

Key findings include:

• Secondary perils in focus: the economic and societal impacts of secondary perils were a focal point for risk managers in 2023 following a year dominated by severe convective storms, wildfires, droughts, and floods
• Record breaking storms: insurers in the US saw the costliest severe convective storms (SCS) year on record, with total claims exceeding $50 billion
• Reassessing thresholds: in recent years, insurers have viewed annualised losses in the region of $20 billion to $30 billion from US convective storms as indicative of a challenging year. But this threshold should now be reevaluated after the unprecedented damage seen in 2023 and the continued growth of property exposures.

Cameron Rye, head of modelling research and innovation, WTW Research Network, said: “In a world increasingly shaped by aging infrastructure, climate change, and urban growth into risk-prone areas, we are now facing disasters that were either not anticipated or deemed unlikely just a few years ago. Beyond economic damages, 2023 highlighted the need for a proactive approach to risk identification, mitigation and adaptation.”

The complete review can be downloaded Natural Catastrophe Review July - December 2023.

WTW will be hosting an informative session on the 31st January that will bring together multi-disciplinary expertise from our WTW Research Network and across WTW, to further explore the emerging scenarios discussed in the review. For more information and to register please click Natural Catastrophe Webinar Program 2024.