Reinsurer Swiss Re warned yesterday that there may be further increases in the future due to climate change, adding that natural disasters have increased the costs of insurance companies in 2022 and inflation has pushed the bill even higher.
The Zurich-based group, which operates insurers for insurers, said economic losses from natural disasters amounted to $2021 billion in 303, down 5,8 percent from $2022 billion in 275.
However, $125 billion of those losses were covered by insurance, up 2021 percent from 3,3, the second year in a row that insured losses from natural disasters exceeded $100 billion.
“The magnitude of losses in 2022 is not a story of exceptional natural hazards, but a picture of increased property exposure highlighted by exceptional inflation,” said Martin Bertogg, Swiss Re's head of disaster hazards.
Inflation has increased compensation costs, especially for buildings, homes and vehicles damaged by natural disasters.
Rising material costs and labor shortages have led to higher demands to cover building repair costs. In the United States, the total cost of replacing buildings in 2022 has increased by an estimated 2020 percent since the beginning of 40.
“While inflation may fall, the increased concentration of value in areas vulnerable to natural disasters remains a key driver for increased losses,” Bertogg said.
Swiss Re said there has been a 30 to 5 percent increase in average annual losses over the past 7 years.
“We expect the trend to continue. The reinsurance giant also noted that growth has been and will be driven largely by the growing danger backdrop due to the increasing severity of damage from individual disasters and the effects of climate change.
Hurricane Ian was by far the most costly event of last year, resulting in an estimated $50-65 billion in insured losses.