The year 2023 unfolded as a stark reminder of the intertwined relationship between natural disasters and climate change. As the world grappled with escalating economic losses, devastating storms, and soaring temperatures, the imperative for comprehensive climate action and disaster resilience measures became more pronounced than ever before.
ECONOMIC TOLL AND INSURED LOSSES
Despite mirroring the five-year average in overall losses, 2023 witnessed a notable divergence in insured losses, reflecting the evolving landscape of climatic risks and financial preparedness. Unlike previous years dominated by mega-disasters, the spotlight shifted to severe regional storms, underscoring the need for adaptive strategies amidst climatic uncertainty.
Worldwide, natural disasters in 2023 resulted in losses of around US$ 250bn (previous year US$ 250bn), with insured losses of US$ 95bn (previous year US$ 125bn). Unlike in previous years, there were no mega-disasters in industrialised countries that drove losses up (such as Hurricane Ian in 2022, which caused overall losses of US$ 100bn and insured losses of US$ 60bn).
RISING DEATH TOLL: A HARROWING REALITY CHECK
The surge in fatalities from natural disasters in 2023 painted a grim picture of humanitarian crises exacerbated by geophysical hazards, particularly earthquakes. With over 63,000 lives lost, the year shattered previous records, serving as a stark reminder of the human cost of climate-induced disasters.
GLOBAL TEMPERATURE RECORDS SHATTERED
As temperatures soared to unprecedented heights, 2023 emerged as the hottest year on record, signaling a worrisome trend exacerbated by climate change. From scorching heatwaves to raging wildfires, the impacts of rising temperatures reverberated across continents, amplifying the urgency for decisive climate action.
Spring temperatures of over 40°C were recorded in southwest Europe (April) and in Argentina (September), temperatures of more than 50°C in northwest China, and night-time temperatures in excess of 32°C in the US state of Arizona in July: according to studies, there are clear connections to climate change.
“The warming of the earth that has been accelerating for some years is intensifying the extreme weather in many regions, leading to increasing loss potentials. More water evaporates at higher temperatures, and additional moisture in the atmosphere provides further energy for severe storms. Society and industry need to adapt to the changing risks – otherwise loss burdens will inevitably increase. Analysing risks and the changes to them is hardwired into Munich Re’s DNA. That is what enables us to consistently offer insurance covers against natural disasters – and even to expand them. This allows us to cushion a portion of the losses and alleviate some of the hardship caused”, explains Ernst Rauch, Chief Climate Scientist.
THE YEAR’S COSTLIEST EVENTS
From the seismic upheavals in Turkey to the ravaging typhoons in the Asia-Pacific region, 2023 bore witness to a litany of costly natural disasters, underscoring the vulnerability of communities to climate-induced hazards. As scientists warn of a shift towards more intense storms and extreme rainfall patterns, the imperative for adaptive measures becomes increasingly evident.
NORTH AMERICA
In North America, natural disasters once again inflicted significant losses, although their share of global losses decreased compared to previous years, accounting for 40% (down from the five-year average of 57%). Total assets worth US$ 100 billion were destroyed, with approximately US$ 67 billion covered by insurance. Despite a high incidence of severe thunderstorms, the overall losses from natural disasters were lower than the previous year’s total of US$ 160 billion, with insured losses amounting to US$ 100 billion.
The hurricane season in the United States was relatively mild, with Hurricane Idalia being one of the most severe storms of the year. Although it made landfall in northwest Florida, the impact was mitigated by the sparsely populated nature of the affected region.
However, the North Atlantic hurricane season saw above-average activity, with 20 named storms, including seven hurricanes, three of which were major hurricanes. The warming water temperatures counteracted the dampening effect of El Niño, resulting in intense storm activity, although most storms remained over the sea and did not make landfall.
Two significant thunderstorm outbreaks occurred in the USA in March (Midwest) and June (Texas), ranking among the costliest natural disasters globally in terms of insured losses. These thunderstorm series caused combined overall losses of US$ 17 billion, with approximately US$ 12 billion covered by insurance.
In August, a devastating fire fueled by strong winds swept through Hawaii, causing extensive damage to the coastal town of Lahaina on the island of Maui. Similar to the Marshall Fire in Colorado in December 2021, this event highlighted the rapid spread of grassfires in high wind conditions, resulting in substantial losses. Overall losses from the Hawaii fire are estimated at US$ 5.5 billion, with roughly US$ 3.5 billion covered by insurance.
EUROPE
Losses from natural disasters in Europe came to US$ 83bn (€77bn), largely due to the earthquake in Turkey. Insured losses came to around US$ 19bn (€18bn). In particular, storms in the Alpine region and in the Mediterranean area contributed to the record thunderstorm losses. In July and August, hailstones measuring up to 19 cm in diameter caused billions of dollars of losses in northern Italy and several other regions. They were the result of the high prevailing temperatures and the accompanying risk of severe storms as a result of increased evaporation. There is scientific evidence that climate change is promoting the development of conditions like these.
Torrential rainfall in countries along the Adriatic coast caused widespread flooding in May and August. A low-pressure system at the start of September triggered severe flooding, particularly in Greece, and then intensified over the Mediterranean to a cyclone, Medicane Daniel. Losses from these events in Europe amounted to US$ 17bn, of which US$ 2bn was insured.
In December, sustained rainfall caused heavy flooding in many parts of northern Germany. As the floods were still ongoing in early 2024, the volume of losses could not be accurately estimated at the time of writing.
ASIA-PACIFIC
In the Asia-Pacific and Africa region, the overall losses in 2023 of US$ 64bn were slightly lower than in the previous year (US$ 66bn). Approximately US$ 8bn of this amount was insured (previous year: US$ 11bn). Japan, a country highly exposed to natural hazards, was largely spared major damage in 2023.
While Typhoon Doksuri was the year’s costliest disaster in terms of overall losses, two major catastrophes in New Zealand together accounted for the highest insured losses in Asia-Pacific (around US$ 4bn). In early February, there were massive floods in and around Auckland, New Zealand’s biggest city, causing insured losses of nearly US$ 2bn and overall losses of US$ 2.9bn. In mid-February, Cyclone Gabrielle hit New Zealand’s North Island and Norfolk Island, resulting in huge damage. Losses from the cyclone were at a similar level to those from the floods.
AFRICA
In Africa, Medicane Daniel made landfall in Libya in September, and was accompanied by torrential rainfall. Dams in the city of Derna collapsed. More than 4,000 people lost their lives in the ensuing floods.
Also in September, around 3,000 people were killed in a 6.8-magnitude earthquake in Morocco. It was the strongest earthquake in Morocco for well over 100 years. The destructive power of the quake produced overall losses of some US$ 7bn. Very little was protected, with insured losses totalling around US$ 0.3bn.
At the start of the year, Cyclone Freddy triggered a humanitarian disaster in southeast Africa. Freddy formed off the Australian coast, before crossing the entire southern Indian Ocean, covering a distance of more than 8,000 kilometres. It now holds the record for the longest cyclone ever registered (five weeks). It made landfall on the island of Madagascar and then meandered back and forth between Madagascar and Mozambique. As a result, Mozambique was impacted twice over by the tropical cyclone. More than 1,400 people were killed in Mozambique and neighbouring countries.
In the northeast of Australia, severe flooding occurred in mid-December as a result of tropical storm Jasper in the state of Queensland. According to media reports, there was more than 800 mm of rain in just one day. This is roughly equivalent to the average annual rainfall in Germany. Numerous rivers burst their banks. It is still too early to reliably quantify the damage.
As in other regions, ENSO conditions influence weather extremes in Asia, in addition to climate change. The El Niño ENSO expression peaked at the end of the year and will most likely subside by mid-year. Australia can therefore hope for a mild cyclone season overall, lasting until the end of April. In contrast, the risk of forest fires is likely to be increased as the lush vegetation of recent months begins to dry out, increasing flammability. If El Niño turns into its counterpart, La Niña, in the second half of 2024, the risk of flooding for eastern Australia could increase.
The outlook for the typhoon season in the northwest Pacific remains unclear due to the uncertainty of ENSO development in the second half of the year. In the event of a La Niña phase, typhoon activity in the northwest Pacific could be below average. However, more storms could hit the Philippines, as storms under La Niña conditions tend to move westwards rather than northwards.
