A new report from the Swiss Re Institute has revealed that global insured losses reached $146 billion in 2024, up from $125 billion in 2023 and significantly exceeding the 10-year average of $108 billion.
Natural catastrophes accounted for $137 billion of 2024’s losses, an increase from $115 billion in 2023 and well above the 10-year average of $98 billion.
According to the firm, the main drivers of the 2024 figures were Hurricanes Helene and Milton, the severe convective storms (SCS) in the U.S., the large-scale urban floods worldwide, and the highest-ever recorded natural catastrophe insured losses in Canada.
Meanwhile, economic losses from disaster events in 2024 totalled $318 billion, with 57% of those losses uninsured. This reportedly resulted in a substantial global protection gap of $181 billion.
“As has been the case in recent years, in 2024, most of the global insured losses were driven by secondary perils, in particular SCS. However, primary perils (tropical cyclones and earthquakes) still hold most loss potential,” the Swiss Re Institute’s report explained.
This trend is underscored by five so-called “peak loss” years over the past three decades, during which annual insurance losses significantly exceeded historical norms.
The most recent occurred in 2017, when hurricanes Harvey, Irma, and Maria drove global insured losses to 111% above the long-term trend.
As recently reported, the Swiss Re Institute has suggested that the reinsurance market is well-positioned to absorb peak loss scenarios, including a 1-in-10 probability that insured losses could reach $300 billion this year.
“Global traditional reinsurance capital is currently estimated to be around $500 billion. Alternative capital, including an estimated $50 billion from the cat bond market, contributes additional capacity to help cover a loss of this magnitude,” the report added.
“But that is no reason for complacency. To sustain its risk transfer function, reinsurance capital needs to keep pace with rising natural catastrophe exposures and earn its cost of capital over a longer time period,” the Swiss Re Institute concluded.
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