Insured losses top $100b for fifth consecutive year

Annual insured losses are expected to rise by 5% to 7%.

It’s a five-peat year for insured losses to surpass the $100b mark, with 2024 on track to become the hottest year on record – global temperatures averaging 1.54°C above pre-industrial levels, according to Swiss Re Institute.

This increase is largely driven by urbanization, economic growth, and rising rebuilding costs, with climate change exacerbating the frequency and severity of these events. Grollimund stressed the importance of prioritizing investment in mitigation and adaptation strategies.

This warming climate has contributed to a rise in natural catastrophes, particularly in Europe and the US. 

According to Swiss Re Institute's estimates, insured losses from floods in Europe have reached the second-highest level ever, whilst the US has been hit by two major hurricanes and a high frequency of severe thunderstorms, accounting for about two-thirds of 2024's global insured losses, which exceed $135b.

Flood risks have surged globally, with severe floods in Europe and the UAE resulting in insured losses of nearly $13b in 2024. 

This year has become the third-costliest for floods worldwide, with Europe alone suffering approximately $10b in losses. 

In April, heavy rainfall led to floods in the Gulf region, impacting Dubai’s airport. In September, Storm Boris caused widespread flooding across Central

Europe, particularly in the Czech Republic, Poland, and Austria. 

This was exacerbated by a Vb low system, which combined warm and cold air, influenced by climate change. In October, Spain experienced flash floods and hailstorms, causing significant damage, particularly in Valencia and Castilla-La Mancha.

Floods can occur in various forms, with pluvial and fluvial floods being the most common. 

Pluvial floods, caused by intense rainfall in a short period, are particularly dangerous in urban areas where drainage systems are overwhelmed, and the soil cannot absorb the water. 

Jérôme Jean Haegeli, Swiss Re’s Group Chief Economist, highlighted that economic development is a major factor in the rise of insured losses. 

However, with increasing risks and higher asset values in vulnerable areas, c, and protection gaps may remain significant. 

Haegeli emphasised the need for both adaptation measures and adequate insurance coverage to ensure financial resilience.

Additionally, severe convective storms, which frequently affect the US, are expected to contribute more than $51b to global insured losses for 2024, the second-highest total after 2023’s record losses of $70b.