Average modeled annual insured cat losses rise 7.9%: Verisk

The global modeled insured average annual loss from natural catastrophes rose to $133 billion for 2023, up 7.9% from 2022, according to a report Friday from Verisk Analytics Inc.

The report also said, based on Verisk’s calculations, there is a 5% probability, or 1 in 20-year chance, of experiencing a loss of more than $238 billion each year.

Changes in the global aggregate average annual loss and exceedance probability loss metrics for 2023 reflect changes in risk as a result of new models, including Italy flood and Middle East earthquake and updates to others including U.S. hurricane, the report said.

Actual losses have also increased. Over the past five years, actual insured losses from natural catastrophes have averaged $101 billion compared with an average of less than $70 billion over the previous five-year period.

There have also been rising losses stemming from so-called “secondary perils,” including severe convective storm and wildfire. Severe thunderstorms have accounted for more than 70% of insured losses thus far in 2023, with eight multibillion–dollar events to date, the report said, citing data from an Aon PLC report.

Exposures have also grown, Verisk said.

“The growth in exposure values, driven primarily by continued construction in high-hazard areas, and rising replacement costs, largely due to inflation, are the most significant factors responsible for increasing catastrophe losses,” Bill Churney, president of Verisk extreme event solutions, said in a statement with the report.