Australia floods, other natural perils drive insured losses to $188 billion
Natural catastrophes, including last year’s historic Australia floods and Hurricane Ian in the US, caused insured losses of $US125 billion ($188 billion) globally, Swiss Re says in its latest Sigma report.
The reinsurer says the figure marks the second straight year that insured losses from natural catastrophes have blown out to $US100 billion ($150 billion) and above. In 2021 natural catastrophes cost the industry $US121 billion ($182 billion).
“The magnitude of losses in 2022 is not a story of exceptional natural hazards, but rather a picture of growing property exposure, accentuated by exceptional inflation”, Head of Catastrophe Perils Martin Bertogg said.
“While inflation may subside, increasing value concentration in areas vulnerable to natural catastrophes remains a key driver for increasing losses.
“For our industry this is a call both to reflect the latest exposure even more carefully in risk assessments while continuing to support society in being better prepared.”
Swiss Re says Hurricane Ian and the record-breaking floods in eastern Australia were among the major loss events for the industry.
It describes the $US4.3 billion ($6.5 billion) Australia February/March flood disaster as the “biggest natural catastrophe claims event ever” in the country.
“In Australia, three consecutive years of La Nina weather patterns have increased the risk of flood events through elevated precipitation levels, dams that are full and saturated soils,” the Sigma report says.
It says the flooding of Brisbane and Sydney are a reminder of the impacts, recurrence and drivers of urban floods, pointing out the share of Australia’s population living in urbanised areas is among the highest in the world and also advanced economies.
“Flood risk in Australia is strongly driven by urbanisation,” the report says. “Ongoing urbanisation, population growth, inadequate flood protection infrastructure and increased soil sealing will add to an increase in flood-related insured losses.
The cost of rebuilding after the floods has been higher than expected as well. Last year’s high economic inflation, driven by disruptions to global supply chains and lingering effects from pandemic-related border restrictions, meant that building replacement costs could have risen by more than 20%, the report says.
Swiss Re says it expects hard market conditions to continue globally due to increased demand for coverage and because of inflation-driven higher values of insured assets.
“Current supply-side stresses also underpin the hard market,” Swiss Re says.
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