Munich Re Member of the Board of Management Thomas Blunck (above) says the reinsurer’s yearly assessment highlights the “increasing toll” of climate change, particularly on vulnerable nations.

“The natural disaster figures for 2022 are dominated by events that, according to the latest research findings, are more intense or are occurring more frequently,” Dr Blunck says. “In some cases, both trends apply.”

“Another alarming aspect we witness time and again is that natural disasters hit people in poorer countries especially hard. Prevention and financial protection, for example in the form of insurance, must therefore be given higher priority.” 

Reinsurers blame climate change for erratic and dangerous weather in their assessment of last year’s global natural catastrophes. And the costs are rising annually.

By Harris Pozderovic

2022 was another 12 months to endure for the insurance industry thanks to nature’s devastating power.

For the second year running and the third time in the past six years, global insured losses exceeded $US100 billion, as wet weather laid waste to Australia, the US and parts of Asia, while Europe was hit by extensive heatwaves.

Reinsurance giants Swiss Re and Munich Re differ on their estimates of insured losses for natural catastrophes – $US115 billion and $US120 billion respectively – but both have held to the same blunt message: these historic costs will continue to rise and put added strain on the insurance industry.

Munich Re’s Chief Climate Scientist Ernst Rauch summarises 2022 as “another year with the development of erratic losses from weather-related events”, with the reinsurer placing provisional estimates for overall economic losses at US$270 billion.

“The learning is that we obviously have to accept as a new normal for the insurance industry that weather-related losses cause on average more than US$100 billion annually,” Mr Rauch says in Munich Re’s annual assessment.

His analysis acknowledges the impact of the third straight year of La Nina conditions, with the persistent flooding in Australia and strengthened hurricanes in North America calculated as the two most expensive events for the year.

Mr Rauch says insurance losses suffered from recent severe weather events, including last year’s flooding in Australia, have not just overtaken previous records but doubled or tripled them. He says the intensity of these events was sustained by the effects of climate change that again “developed in full force”.

“Climate attribution science is telling us that in the future climate change will lead to more frequent and more intense weather-related events. We, the insurance industry, have to be prepared for such developments,” he says.

The Swiss Re Institute notes in its assessment that apart from Hurricane Ian and Australian floods, other extreme weather events such as the winter storms in Europe, flooding in South Africa and hailstorms in France and the US made 2022 the second consecutive year in which insured losses have totalled more than US100 billion.

Devastating event: Hurricane Ian, which smashed through homes in Florida, accounted for almost half of all global insured losses last year


This continues the trend of a 5–7% average annual increase over the past decade.

“To enable the insurance industry to keep up with increasing volatility and demand, it will be key to model evolving frequency and severity trends. Pricing needs to reflect the effective risk,” Swiss Re Chief Underwriting Officer Thierry Leger says.

Hurricane Ian, which struck the US and Caribbean in late September, accounted for nearly half of all global insured losses, with Munich Re’s estimates nearing $US60 billion ($86.80 billion).

The storm made landfall in western Florida with wind speeds of nearly 250kmh, marking it as one of the strongest storms in recorded history – before it made a second landfall in South Carolina.

Munich Re’s analysis says devastating storms like Ian “fit in with the anticipated consequences of climate change,” with researchers anticipating a “rise in the proportion of particularly severe cyclones with exceptionally heavy rainfall”.

Overall, North America was the region responsible for the largest portion of insured losses with figures of roughly $US90 billion ($130.20 billion), with the US primarily bearing the brunt of costs.

While Hurricane Ian accounted for a good portion of those costs, Winter Storm Elliot, which hit just before Christmas, was also an expensive event for reinsurers. Estimates have yet to be tallied for the chill that struck northern parts of the US, leaving millions without power, but it is expected to be in the billions in line with previous winter storms, such as 2021’s polar vortex.

Other costly events in the region included severe convective storms, which posted average levels of loss compared to the past five years. But thunderstorms posted a “significantly greater” cost compared to the past five years, costing about $US17 billion in insured losses.

Munich Re’s estimated insured losses for Australia’s eastern states floods in February and March are about $US4 billion. For all floods during 2022 in Australia, economic losses are estimated at US$8.1 billion, of which US$4.7 billion was insured.

“Natural cycles play an important role in Australian flood risk, as torrential rainfall is much more likely during La Nina years,” Munich Re says. “However, researchers now believe that climate change is additionally influencing the intensity of the rainfall.”

Record-breaking rainfall and flooding in Pakistan caused economic costs of up to $US15 billion ($21.50 billion). Munich Re says the floods were responsible for the “greatest humanitarian disaster” of the year, with more than 1700 casualties and millions displaced.

While insurance losses were minimal due to the country’s fragile economic conditions, the reinsurer uses the Pakistan catastrophe as a clear example of the severe impacts of climate change, with the group’s researchers saying its intensity was increased by nearly half due to accelerated glacier melt.

Swiss Re’s assessment of the past year’s catastrophes commends the industry for covering about 45% of all economic losses relating to natural catastrophe costs last year, but says greater attention needs to be placed on “secondary perils”, including floods as well as hailstorms, which caused billions in economic damage in areas across France and Spain.