Earthquakes, hurricanes, floods, storms and other natural events caused $250 billion in damage worldwide last year and claimed 74,000 lives. This is what the reinsurer Munich Re reports in the new edition of its annual natural catastrophe report published on Tuesday. The devastating series of earthquakes in Turkey and Syria in February claimed the most victims.
The death toll is the highest since 2010, said Ernst Rauch, the DAX group’s chief geoscientist. “This was mainly the earthquake in Turkey with 58,000 deaths.” According to Munich Re, this was also the most financially serious natural disaster of the past year, with economic damage amounting to $50 billion. Of this, only a small portion of $5.5 billion was insured. Globally, insurers covered 95 of the $250 billion in losses for the year as a whole.
Munich Re has been documenting the global destruction caused by nature for decades, as this is important for calculating insurance premiums. The total economic damage of 250 billion US dollars (around 228 billion euros) corresponds to the average for the past five years.
The longer-term trend is upward: Adjusted for inflation, the total damage over the ten-year average (2013 to 2022) was $230 billion; the average over the 30 years from 1993 to 2022 was $180 billion.
The global damage pattern in 2023 differed from the usual: Unlike in many other years, according to Munich Re, there was no immense damage in the industrialized countries from individual, very large hurricanes, floods or any other major disaster. “Typically in the past we have had one or more really major events that caused a large part of the damage,” said chief geoscientist Rauch.
In 2022, Hurricane Ian alone, which hit the US state of Florida and the Caribbean, caused 60 of the $125 billion in insured damage worldwide. “This was a single event that accounted for almost half of the total damage.”
In 2023, no such major natural disaster hit an industrialized country. “This year we have no peak load, neither for the economy as a whole nor for the insurance industry, but it was still a year with serious and noticeable damage,” said the scientist. “What is new and both socially and economically relevant is that the damage was very much driven by so-called severe thunderstorm events.”
According to the company, the large number of medium-sized and smaller storms caused significantly more than half of the damage. “When it comes to severe thunderstorms/storms, we have been seeing a trend toward ever-increasing damage for years, something like a trend that is probably related to climate change,” said Rauch.
The storms were favored by the very high global average temperatures. The DAX group pointed out that the average temperatures up to November were around 1.3 degrees Celsius above those in the pre-industrial period (1850-1900), making 2023 the warmest year since temperature measurements began.
According to Munich Re, such high levels of thunderstorm damage have never been recorded in either North America or Europe: in North America it was $66 billion. For Europe, the group estimated the total damage at 10 billion dollars (around 9.1 billion euros).
“The insurance industry uses the terms ‘secondary perils’ and ‘non peak perils’ for these storms,” said Rauch. “But these earlier secondary dangers or non-peak events have cumulatively moved to a dimension that is already close to individual major events.” The insurance industry must adapt its risk management. “But broader society must also be prepared for severe weather events to cause significantly greater damage.”
However, in Rauch’s words, prevention is possible: “There are three drivers when it comes to the amount of damage caused by natural disasters,” said the geologist. “One is the nature, that is, the severity of the event. Second is the financial value of the damaged goods, which is currently heavily influenced by inflation.”
In third place is vulnerability – or resilience: “How well are buildings or infrastructure protected against extreme events? This third factor is the biggest factor when looking for solutions to dampen the development of damage.”