Verisk's 'Global Modeled Catastrophe Losses Report' has been a staple in predicting losses from natural disasters for over a decade. In 2023, the report estimated a record high global modeled insured average annual loss of US$133 billion. Giovanni Garcia, SVP of business development at Verisk London, shared that this figure is expected to continue rising, with total insured losses from natural catastrophes exceeding US$100 billion annually.
The increase in losses can be attributed to various factors, with rapid inflation and rising material costs, particularly in reconstruction, playing a significant role. Garcia highlighted that reconstruction costs have increased by around 4.3% in the past year, nearing normal values.
Climate change is also a major concern, with record-breaking weather events contributing to escalating insured losses. Garcia noted that events like floods, wildfires, and severe storms are becoming more prevalent, with severe thunderstorms being a primary contributor to insured losses in 2023.
Understanding and managing these factors are crucial for the (re)insurance market to navigate potential losses and maintain profitability. Garcia emphasized the importance of using catastrophe models to assess risks accurately and manage property-catastrophe risks globally. Utilizing these models is vital for insurers, reinsurers, and brokers in risk transfer to effectively mitigate losses.
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