2023 revealed the scale of the protection gap, but was still a $100bn+ nat cat year, the broker said.
2023 was the fourth consecutive year of a global insured loss exceeding $100bn, broker WTW has noted in its Natural Catastrophe Review.
Such an annual insurance loss is “becoming the norm, not the exception”, the insurance broker warned.
With a total economic loss surpassing $350bn, it has become clear that the protection gap is ever present, WTW 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,” said Cameron Rye, head of modelling research and innovation, WTW Research Network.
“Beyond economic damages, 2023 highlighted the need for a proactive approach to risk identification, mitigation and adaptation,” he added.
Three key findings included:
- 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 $50bn
- Reassessing thresholds: in recent years, insurers have viewed annualised losses in the region of $20-30bn 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, WTW said.
The report itself can be downloaded here.