Unprecedented levels of damage from storms this year is upending US towns and the insurance industry

42

Unprecedented levels of financial damage caused by storms this year have disrupted both U.S. towns and the insurance sector. The first half of this year saw a series of intense thunderstorms in the U.S., resulting in insured losses amounting to $34 billion. This rapid and extensive financial impact is unparalleled and is attributed to the escalating frequency and severity of severe weather events due to climate change, as stated by Swiss Re Group.

Approximately 70% of the total global catastrophic damages, totaling $50 billion, were incurred from convective storms in the U.S., characterized by features such as hail, lightning, heavy rainfall, and strong winds. These statistics were released by the reinsurer, with their report including data on earthquakes in Turkey and Syria.

Remarkably, the U.S. experienced 10 particularly damaging storms that each caused losses of $1 billion or more, a figure nearly twice the average of the previous decade. Texas suffered the most significant impact among the states.

Swiss Re Group Chief Economist Jérôme Jean Haegeli emphasized that the manifestations of climate change are already apparent in events like heatwaves, droughts, floods, and heavy precipitation. Beyond climate change, urban expansion into vulnerable coastal and riverine areas along with increased development in wilderness regions are resulting in a challenging mix of high-value assets exposed to heightened risks.

The second half of the year also witnessed prominent meteorological incidents, including heatwaves in the U.S., northwestern China, and southern Europe, as well as wildfires in various locations like Greek islands, Italy, and Algeria. The losses and insurance claims from these events are still being calculated, according to Swiss Re.

This year’s first-half figures align with a recent report from Munich Re, another major reinsurer. This report indicated that the series of thunderstorms that struck Texas in June constituted the most expensive single event in the U.S. for the year. The losses from these storms alone are estimated at around $8.4 billion.

Given the increasing intensity and frequency of devastating storms, Marcus Winter, CEO, North America at Munich Reinsurance America, emphasized the urgent need to prepare communities for the physical and financial risks posed by climate-related weather events.

Despite years of rising premiums, the insurance industry has faced disruptions due to the growing prevalence of extreme weather events. Some insurers have even withdrawn from states like Florida and California that are severely impacted by these events. This retreat is occurring despite efforts by lawmakers to stabilize the insurance market in the face of mounting challenges posed by climate change.

Frequently Asked Questions (FAQs) about climate-intensified

More about climate-intensified

• Swiss Re Group
• Munich Re
• Climate Change and Insurance
• Climate-Related Weather Events
• Insurance Market Challenges Due to Climate Change