Severe thunderstorms in first half of 2023 caused record amount in damages: research

Severe thunderstorms in the first half of 2023 caused a record amount in insured losses, underscoring the impact of climate change on extreme weather events, according to new research for the Swiss Re Group. 

A recent report from the group found severe thunderstorms in the first six months of the year caused $34 billion in damages, the highest insured losses ever recorded in a six-month period. Ten events prompted losses of $1 billion and more each, compared to an annual average of six events during the past 10 years. The most affected state was Texas, the report found.

“With severe thunderstorms as the main driver for above-average insured losses in the first half of 2023, this secondary peril becomes one of the dominant global drivers of insured losses,” said Martin Bertogg, head of Catastrophe Perils at Swiss Re. 

Severe convective storms, which the reinsurer group defines as storms “associated with thunder, lightning, heavy rain, hail, strong winds and sudden temperature changes,” accounted for $35 billion — or 70 percent — in insured losses worldwide in the first half of 2023. The report said this number is almost twice as high in a six-month period as the annual average of the past 10 years. 

Bertogg pointed to the growing risks to large urban areas, noting New Zealand experienced two severe weather events two weeks apart earlier this year. The North Island of New Zealand was hit with a damaging cyclone in February in succession with severe flooding in Auckland, which marked the two costliest weather-related insured loss events in New Zealand since 1970 and amounted to around $2.3 billion in insured losses, the report said. 

“The effects of climate change can already be seen in certain perils like heatwaves, droughts, floods and extreme precipitation,” said Jérôme Jean Haegeli, Swiss Re's Group chief economist. “Besides the impact of climate change, land use planning in more exposed coastal and riverine areas, and urban sprawl into the wilderness, generate a hard-to-revert combination of high value exposure in higher risk environments.”

Haegeli said protective measures need to be “taken for insurance products to remain economical for such properties at high risk,” and he pushed for further investments in climate adaption.

The report pointed to heavy rainfall in May in northern Italy’s Emilia-Romagna region, where an estimated $600 million was reported in insured losses, marking the costliest weather incident since 1970. The report estimated economic losses to be $10 billion and noted 94 percent of the losses are uninsured in Italy. The report said this highlights the “important role” insurance plays in closing the protection gap and helping “households strengthen their financial resilience against natural catastrophes.” 

Insurance companies recently pulled back in some hard-hit U.S. states as the climate and natural disasters intensify across the country. State Farm, California’s largest homeowners’ insurer, announced in May it will no longer offer home and property insurance to new customers in California, citing “rapidly growing catastrophe exposure.” Later in June, Farmers Insurance said it will no longer write new property insurance policies in Florida, blaming “catastrophe costs … at historically high levels.” 

Swiss Re noted the extreme meteorological events already taking place in the second half of 2023, including last month’s heat waves in the U.S., northwestern China and southern Europe, and wildfires on several Greek islands and in Italy and Algeria. The report said it is too early to estimate the economic and insured losses for these events. 

Swiss Re also touched upon the rise in losses from natural catastrophes, which amounted to $120 billion in overall economic losses in the first half of 2023, compared to the $123 billion in the same period last year. This is 46 percent above the 10-year average, the report found.