Why Insurtech Remains Steady As Other Fintech Segments Falter  January 24th 2024

Number of Billion-Dollar Disasters in 2023 Highest on Record: Aon Report

Aon plc (NYSE: AON), a leading global professional services firm, today published its 2024 Climate and Catastrophe Insight report, which identifies global natural disaster and climate trends to help make better decisions to manage volatility and enhance global resilience.

The report reveals that the 398 global natural disaster events caused a $380 billion (2022: $355 billion) economic loss during the 12-month period under review – 22 percent above the 21st-century average – driven by significant earthquakes and relentless severe convective storms (SCS) in the United States and Europe.

Global insurance losses during the year were 31 percent above the 21st-century average, exceeding $100 billion for the fourth year in a row. With insurance covering only $118 billion (2022: $151 billion), or 31 percent of total losses, the 'protection gap' stood at 69 percent (2022: 58 percent), which highlights the urgency to expand insurance coverage.

The number of large-loss natural hazard events reached record levels in 2023, with 66 billion-dollar economic loss events, and 37 billion-dollar insured loss events. Earthquakes caused the most economic losses, while severe convective storms were most costly to insurers. New Zealand, Italy, Greece, Slovenia and Croatia all recorded their costliest weather-related insurance events on record.

The report highlights that 95,000 people globally lost their lives due to natural hazards in 2023 – the highest number since 2010 – resulting largely from earthquakes and heatwaves. In terms of climate, 2023 was the hottest year on record with 'unprecedented temperature anomalies', and all-time highs observed in 24 countries and territories.

"Amidst increasing volatility and complexity, there is a significant opportunity for organizations to become more resilient to the climate and catastrophe risks highlighted in our report," said Greg Case, CEO of Aon. "By working across the private and public sector we are accelerating innovation, protecting underserved communities and better addressing the economic impacts of extreme weather to create more sustainable outcomes for businesses and communities around the world."

Cat insured losses in 2023 exceed long-term average by 31%: Aon

Insured losses from natural catastrophes and climatic events totaled $118 billion in 2023, 31% above the long-term average, according to a report Tuesday from Aon PLC.

There were 37 insured loss events of $1 billion or more, a record yearly high and more than twice the annual average of 14. Some two-thirds, or 67%, of insured losses occurred in the United States, according to the report.

The single costliest event was the earthquakes that hit Turkey and Syria in January and February, causing an estimated $5.7 billion in insured losses and $92 billion in total economic losses. Economic losses for the year were $380 billion, 22% above the long-term average.

Severe convective storm was the most damaging peril for insurers, causing an estimated $70 billion in insured losses, or 59% of the total. Flooding was the second costliest at $13 billion.

Of the 37 billion-dollar insured loss events, 25 were severe convective storms, 21 of which occurred in the U.S.

No single loss event reached $10 billion in insured losses, but the 37 billion-dollar events “underlines the growing frequency of medium-sized events, particularly severe convective storms, and their impact on global losses,” the report said.

Insurance challenges rise with surge in empty offices

Office building owners, faced with a record level of vacancies driven by the continuing shift to hybrid work, may experience pushback from insurers that previously were eager to provide coverage for the risks.

Policyholders with low-occupancy buildings should review their property insurance policies to better understand how vacancies could affect their coverage, experts say.

Securing coverage can be more difficult and costly because vacant properties are viewed as more exposed to potential losses, such as from fire, theft and vandalism, they say.

The U.S. office vacancy rate rose to a record 19.6% in the fourth quarter of 2023, up from 19.2% in the third quarter, and 18.7% in the fourth quarter of 2022, according to a report by Moody’s Analytics, a unit of Moody’s Corp., issued Jan. 8. The previous record of 19.3% was set in 1991 during the savings and loan crisis, Moody’s said.

The Denver, Los Angeles, Philadelphia, San Francisco and Seattle metro areas are among those that saw more than 1 million square feet in office space vacated last year.

Building owners should review their property insurance policies to better understand how “vacancy” is defined and what steps they may need to take to maintain coverage, said Jeff Buyze, Fort Lauderdale, Florida-based vice president, national property practice leader, at USI Insurance Services LLC.

Typically, “there’s a vacancy clause that specifies if, how and when coverage would be restricted if a property is vacant,” Mr. Buyze said.

Class Actions Filed Over Builders Mutual, Progressive’s Own Data Breaches

Progressive Casualty Insurance and North Carolina-based Builders Mutual Insurance Co. have been served with class-action lawsuits over data breaches on their own computer systems in 2022, cyber attacks that may have exposed the personal data of more than 411,000 people.

“Plaintiffs bring this class action against Builders Mutual for its failure to properly secure and safeguard Plaintiffs’ and other similarly situated individuals’ name, date of birth, Social Security Number, and workers compensation information … from hackers,” reads the amended complaint against Builders Mutual, filed last week in federal court in North Carolina.

In federal court in South Carolina, plaintiff Dodie Waden, a resident of Columbia, South Carolina, and others made similar allegations about Progressive, which had learned of a data breach in May 2023.

“Defendant knew or should have known that due the increasing number of well-publicized data breaches that have occurred in the United States, large data storage such as this require the highest level of protection, which Defendant failed to provide,” reads the complaint.

While insurers worldwide in recent years have faced insured losses from cyber attacks on their policyholders, as well as some thorny litigation about the extent of coverage, relatively few carriers have seen class actions over reported breaches in their own computers.

Marsh & McLennan Companies were famously sued by an employee after a 2021 computer breach reportedly exposed personal information to cyber criminals. That case is still pending, but an appeals court ruling last fall opened the door for more U.S. lawsuits alleging harm from cyber attacks, even when plaintiffs provide no evidence that the data was improperly used.