New Report: Average Annual Natural Catastrophe Losses for the Insurance Industry Reaches New High of $151 Billion

Core Insights - The average annual loss (AAL) from global natural catastrophes has reached a record high of $151 billion, with non-crop losses accounting for $119 billion [1][2] - The average exposure growth is projected at 7.2%, driven by property replacement values from new construction and inflation over the past five years [1][2] Group 1: Industry Trends - The insurance industry should prepare for total annual insured losses from natural catastrophes averaging $151 billion, with potential for higher losses in large loss years [3] - Factors driving the rise in global insured natural catastrophe losses include rapid urban expansion, climate change impacts, and increasing frequency of events alongside economic and social inflation [3][4] - More than half of the global population now resides in urban areas, contributing to rising exposure levels in both developing and developed countries [3] Group 2: Climate Change Impact - Climate change is expected to increase the frequency and intensity of extreme weather events, although its current contribution to annual loss increases is approximately 1% [5][6] - Understanding the climate's role in variability of global insured AAL is crucial for accurate risk modeling and management [6] Group 3: Recent Losses and Events - In 2023, insured losses were primarily driven by severe thunderstorms, with the U.S. experiencing a record-setting season that contributed over $57 billion to total insured losses [7] - The adjusted AAL for U.S. severe thunderstorms over the past five years has risen to approximately $39 billion, up from around $23 billion in the previous five-year period [7] Group 4: Verisk's Role - Verisk provides advanced catastrophe models that help the insurance industry understand and manage risks associated with natural catastrophes [8][9] - The models are designed to instill confidence in the management of insured risks and assist companies in stress-testing their portfolios against long-term climate change impacts [9]