Extreme storms and other natural disasters cost the world about $250 billion of losses last year, with less than half that amount actually covered by insurers, according to data compiled by Munich Re.
The bill exceeds the 10-year average, and includes the impact of catastrophic losses caused by earthquakes in Turkey and Syria. The US, meanwhile, had a less severe hurricane season than in 2022 with many insured losses instead stemming from regional thunderstorms, Munich Re said.
Ernst Rauch, chief climate scientist at Munich Re, says insurers are now having to rethink how they classify storms.
"We used to refer to regional thunderstorms as secondary perils because they only cause small or medium-sized damage on their own," he said in an interview. "But as the number of thunderstorms increases, we have to think about a new classification."
Last year was the planet's hottest on record, distorting weather patterns and exposing millions of people to dangerous temperature. The fallout of climate change has major implications for how the insurance industry handles claims, with the Bank for International Settlements recently warning that governments are increasingly being left to foot the bill.
Overall, global insured losses dipped to $95 billion last year, Munich Re estimates.
Scientists are already predicting that 2024 will be hotter than last year, which raises the likelihood of more extreme weather events. "More water evaporates at higher temperatures, and additional moisture in the atmosphere provides energy for severe storms," Rauch said.
In 2023, insured losses from severe thunderstorms "- characterized by sudden heavy rains, high wind speeds, as well as hail and flash floods "- hit $50 billion in the US and $8 billion in Europe, with both figures representing records, according to Munich Re.
In Europe, hailstones measuring up to 19 centimeters in diameter (7.5 inches) led to billions of dollars of losses in northern Italy and a number of other regions in July and August. In the US, some of the biggest storm-related losses were in the Midwest in March and Texas in June. Munich Re noted that damage from hurricanes was limited last year, with Idalia hitting parts of Florida that are sparsely populated.
Devastating earthquakes in southeast Turkey and Syria in February, meanwhile, resulted in overall losses of $50 billion last year. Of that, only $5.5 billion was insured, Munich Re said.