The first 6 months of 2023 saw above-average natural catastrophe losses, with many of those losses the result of severe convective storms, according to multiple analyses of first-half catastrophe activity.
In its H1 2023 Natural Catastrophe Report, Gallagher Re says a preliminary estimate showed $138 billion in economic losses during the first 6 months of this year, of which $52 billion were insured, according to Gallagher Re. That loss demonstrated a protection gap of 63 percent, Gallagher Re’s July 17, 2023, report says.
The first-half loss totals solely due to weather and climate events were $92 billion in economic losses and $46 billion in insured losses, the Gallagher Re report says.
“The severe convective storm (SCS) peril was highly dominant for the insurance industry in H1 2023,” Gallagher Re’s report says. “A very active multi-month pattern spawned a prolific series of outbreaks across the US that led to a minimum of $34 billion in insured losses.” Those losses represented 65 percent of all global insured losses during the first half of 2023, Gallagher Re notes.
Gallagher Re notes that while at least 812 confirmed tornadoes touched down during the period, hail was the dominant damage cost driver, with the US National Oceanic and Atmospheric Administration Storm Prediction Center recording at least 729 individual instances of hail larger than 2 inches in diameter striking US communities.
“For all perils, the US accounted for 76 percent of global insured losses; but just 38 percent of global economic losses,” Gallagher Re says. “Thunderstorms in Europe during June brought a billion-dollar insurance bill to parts of Germany and France.”
In its own Global Catastrophe Recap First Half of 2023, Aon offers a similar take, though with slightly different loss estimates. Aon offers a preliminary estimate of $194 billion in first-half economic losses due to natural catastrophes, well above the 21st-century average of $128 billion and the fifth-highest figure on record.
Aon notes that losses experienced during the first 6 months of 2023 represent 60 percent of the global annual average.
The year’s first half saw 25 individual billion-dollar economic loss events, Aon says, with all but one of those events weather related. The lion’s share of those loss events, 17, were in the United States; with 4 in the Asia Pacific region; 3 in Europe, the Middle East, and Africa; and 1 in the Americas, according to Aon’s July 20, 2023, report.
Preliminary estimates of global insured losses caused by first-half natural catastrophes showed them 46 percent above the 21st-century average, Aon says, and the fourth-highest first-half total on record, trailing only 2011, 2022, and 2021. “Similarly to previous years, losses were driven by SCS activity, predominantly in the United States,” the Aon report says.
There were at least 18 individual billion-dollar insured loss events during the first half of this year, according to Aon, with 14 in the United States, 2 in New Zealand, 1 in Turkey, and 1 in Western and Central Europe.
Severe convective storms in the United States represented 9 of the 10 costliest insured loss events during the first half of this year, Aon says. Topping the list, however, was the earthquake sequence in Turkey, where public and private insured losses are estimated at more than $5.6 billion.
First-half insured losses in the United States reached at least $40 billion, according to Aon, representing the third-highest first-half total on record after 2011 and 2021.
The Aon report stresses the increasing impact of severe convective storms in the United States as a source of insured catastrophe losses.
“Relentless severe convective storm activity across the United States throughout the first half of 2023 reaffirmed the position of this ‘secondary’ peril as the dominant global driver of insured losses,” Aon says. “Considering preliminary estimates and potential loss development in the coming weeks and months, the 1H of 2023 will exceed the current record for the period, set in 2011. Remarkably, the first quarter was by far the costliest Q1 on record, if the outbreak of March 31–April 1 is included, surpassing the previous record by nearly 50 percent.”
Aon notes that unlike large catastrophic events, which occasionally produce extreme losses from primary perils, severe convective storm losses are characterized by a higher—and increasing—frequency of small- and medium-sized events. “This is also demonstrated by a number of billion-dollar events, which was the highest on record in 2023,” Aon says.
Gallagher Re’s report set the total economic loss from first-half severe convective storms in the United States at $44 billion, with the previously noted insured loss of $34 billion. Those preliminary figures would make this year’s first 6 months the second-costliest first half on record, Gallagher Re says.
According to Gallagher Re’s report, secondary perils accounted for 63 percent of the global first-half economic loss total.
“The SCS peril dominated insurance industry payouts, with the total ($35 billion) representing 69 percent of natural hazard-related claims payouts,” the Gallagher Re report says. “The US minimally incurred its second costliest H1 for the SCS peril on record.”
This year already ranks as the third-costliest year on record for US severe convective storms, behind only 2020 and 2011, Gallagher Re says, and is the 16th consecutive year with US SCS losses of more than $10 billion.