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Finance professionals lamenting the\u00a0ever-increasing costs<\/a>\u00a0of insuring their commercial property portfolios likely won\u2019t be surprised by the\u00a0latest research<\/a>\u00a0from global reinsurer Swiss Re<\/a>, which reported global insured losses from last year\u2019s natural catastrophes (Nat Cat) totaled $108 billion, exceeding the $100 billion mark for the fourth year in a row.<\/p>\n Combating these rising losses will require premium increases, risk management, and broader societal efforts, according to Swiss Re experts.<\/p>\n \u201cAs weather hazards intensify due to climate change, risk assessment and insurance premiums need to keep up with the fast-evolving risk landscape,\u201d Moses Ojeisekhoba, Swiss Re\u2019s CEO of global clients and solutions, said in a statement. \u201cLooking ahead, we must focus on reducing the loss potential\u2026Keeping property insurance sustainable and affordable requires a concerted effort by the private industry, the public sector and broader society\u2014not just to mitigate climate risks, but to adapt to a world of more intense weather.\u201d<\/p>\n Globally, Nat Cat insured losses have outpaced the global economy \u201cat a much faster rate\u201d over the past three decades, according to the report, with losses increasing an average of 5.9% per year versus a 2.7% increase in global GDP.<\/p>\n In the report, Swiss Re acknowledged that the insurance industry \u201crequires that premiums be commensurate with the underlying risk.\u201d But rate increases alone aren\u2019t enough anymore. The report recommended other measures including building code enforcement, flood-control infrastructure, and discouraging development in catastrophe-prone areas. \u201cMitigation of greenhouse gas emissions is also essential to counter the build-up of physical risks,\u201d the report said.<\/p>\n Severe convective storms (SCS) have become the second costliest Nat Cat peril behind only tropical cyclones, according to the report. SCS (yes, the insurance industry loves its acronyms) is a catch-all term for weather events including tornadoes, straight-line winds, and hail storms. SCS-insured losses reached $64 billion last year, a new record. Most of the losses (85%) took place in the US; the Midwest and Central US regions accounted for approximately 30% each.<\/p>\n SCS-related insured losses in the US increased 8% annually between 2008 and 2023, according to Swiss Re. The main drivers behind the increase include inflation; costlier repairs and construction; economic growth, particularly in high-risk areas; and climate change.<\/p>\n This article was initially published<\/a> by CFO Brew<\/a>, a branch of Morning Brew<\/a>.<\/em><\/p>\n<\/div>\n\nSevere storms, severe losses<\/strong><\/h2>\n
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