Index hikes 2023 nat cat costs

The insured costs of several major natural perils in 2023 are increasing according to risk and loss organisation CRESTA.

The insurance industry organisation that provides a global standard for risk accumulation zones and natural catastrophe industry losses, has issued its Q1/2024 update of its CRESTA Industry Loss Index (CLIX).

The organisation provides industry loss data on international (non-US) Cat events which have generated losses to the insurance industry in excess of $1billion. In the latest update, a total of 25 Cat events were reviewed, and loss numbers were updated where new information became available.

The update revealed only one event, the Noto Peninsula Earthquake in Japan of 1 January 2024, was added to the loss database during the quarter. The initial estimate of the insured loss from the event is $1.9 billion making it the only event to exceed the CLIX loss capture threshold of $1 billion during the period.

The  CLIX warned some events that occurred in 2023, however, experienced significant upward loss revisions. These include the severe convective storms in Northern Italy in July 2023 (the Caronte storms) which saw the insured loss estimate revised to $4.8 billion, up from $2.7 billion in CRESTA’s previous release. These storms brought damaging hail and winds to the regions of Lombardy, Veneto, Friuli-Venezia-Giulia, Piemonte and Emilia-Romagna, and to a lesser degree to Austria and Slovenia.

A further two severe convective storm events in Europe – storms “Lambert-Kay” in June 2023 and “Denis” in August 2023 – also saw upward revisions to their insured loss figures which now exceed the $1billion level. The events predominantly impacted Germany, Switzerland and Austria.

Tragically, 244 people died in the event. The loss to the insurance industry is estimated at $1.9 billion in CRESTA’s initial event report.

Matthias Saenger, manager at CRESTA CLIX, explained: “Our most recent update shows a benign first quarter with only the Noto earthquake exceeding our capturing trigger of $1billion. However, there were significant upward revisions to some of the insured loss figures for events occurring in 2023. Event loss figures for large and unprecedent events in particular, such as the Kahramanmaras earthquake in Türkiye and the Caronte hailstorms in Italy, have the potential to increase substantially over a period of time. This demonstrates the importance of regular reviews of industry losses, which is something that CRESTA puts a great amount of effort into.”

He continued: ”Our data also show that severe convective storms are no longer purely an issue of frequency but also of severity, with multi-billion event losses becoming more common. It is time to consider no longer referring to severe convective storms as ‘secondary perils’.”