Making Sense of the Market

Global Insured Catastrophe Losses:
- In 2022, total insured losses were estimated at $140 billion, with private insurers covering $125 billion, making it the fifth year since 2017 to cross the $100 billion threshold for insurers.
- The cost of weather events intensified by climate change resulted in a direct economic cost of $360 billion in 2022, with only ~40% covered by insurance providers.

Increasing Severity and Frequency of Disasters ... a Sampling:
- Germany and parts of Europe experienced significant flooding in July 2021, while heavy rains deluged Australia’s east coast earlier in 2022.
- Hurricane Ian led to nearly $55 billion in losses for public and private insurance entities and an overall economic loss of $112 billion in the United States alone.
- The deadliest world natural catastrophes in 2022 resulted in approximately 31,300 deaths globally, with events like the European heatwave and India seasonal floods yielding the most significant impacts.

Insurer Response to Climate Risks:
- 74% percent of insurers expressed that climate change made it hard to insure some areas, leading to insurers pulling out of high-risk regions such as California and Florida; major insurance providers including Allstate, State Farm, and Farmers Insurance, which is a part of Zurich Insurance Group, are retreating from areas prone to disasters.
- More than 30% of insurers globally restrict investment in unsustainable companies, and over 20% restrict insurance cover to these companies.
- Risk-assessment firm Verisk Analytics recently projected that average annual losses could soon amount to $133 billion. Uninsured losses will be multiples greater. Troublingly, in North America, only 51% of natural-catastrophe risk is covered. In Europe, it's at 44%, and in Asia 12%.

Consumer Perspective:
- There is a growing trend of homeowners and businesses in high-risk areas foregoing insurance coverage due to rising premiums and reduced affordability.
- In a recent survey of American insurance customers, 71% percent of insurance customers in high-risk areas observed that they were becoming increasingly concerned by the accelerating pace of premium rate hikes.