Severe storms lead to unprecedented $34 billion in US insured losses so far this year, Swiss Re says
Aug 9, 2023, 8:41 AM
File - A person stands outside of a damaged home after a tornado hit May 13, 2023, in the unincorporated community of Laguna Heights, Texas near South Padre Island. A series of severe thunderstorms in the U.S. resulted in $34 billion in insured losses during the first half of the year, the highest amount ever for insured losses in the period, according to Swiss Re Group. (AP Photo/Julio Cortez, File)
Credit: ASSOCIATED PRESS
(AP Photo/Julio Cortez, File)
Waves of severe thunderstorms in the U.S. during the first half of this year led to $34 billion in insured losses, an unprecedented level of financial damage in such a short time, according to Swiss Re Group, as climate change contributes to the frequency and severity of violent meteorological events.
Damages from convective storms in the U.S., those that can come with hail, lightning, heavy rain and high winds, accounted for nearly 70% of the $50 billion in global catastrophic damages so far this year, the reinsurer said Wednesday. Those global figure includes earthquakes in Turkey and Syria.
The storms in the U.S. were so severe, there were 10 that resulted in damages of $1 billion or more, almost double the average recorded over the past decade, according to Swiss Re, and Texas was the state most severely effected.
“The effects of climate change can already be seen in certain perils like heatwaves, droughts, floods and extreme precipitation,” Swiss Re Group Chief Economist Jérôme Jean Haegeli said in a prepared statement. “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.”
There have been a multitude of high profile meteorological events to start the second half of the year including heatwaves in the U.S., northwestern China and southern Europe, and wildfires on Greek islands, Italy and in Algeria.
Damages and insurance losses from those events are still being tallied, Swiss Re said.
The increasing frequency of extreme weather have created disruptions within the insurance industry and some have retreated from states that are getting hit hard, such as Florida and California.
The pullback by insurers is happening despite years of skyrocketing premiums for property owners in hard hit states.
State Farm and Allstate have pulled back from California’s home insurance market, saying that increasing wildfire risk and soaring construction costs mean they’ll no longer write new policies in the nation’s most populous state.
Last month Travelers said catastrophe losses doubled in its most recent quarter and the company, considered a bellwether for the insurance industry due to its size, said it lost money.
AAA has said that it will not renew “a very small percentage” of homeowners and auto insurance policies in hurricane-wracked Florida, joining other insurers in limiting their exposure in the Sunshine State despite efforts by lawmakers to calm the volatile insurance market.
AAA insists it’s not leaving Florida, but that last year’s devastating hurricane season had led to an unprecedented rise in reinsurance rates, making it more costly to operate there.
Florida has struggled to maintain stability in the state insurance market since 1992 when Hurricane Andrew flattened Homestead, wiped out some insurance carriers and left many remaining insurers anxious about writing or renewing policies in Florida. Risks for carriers have also been growing as climate change increases the strength of hurricanes and the intensity of rainstorms.
