Chubb's Greenberg tops P&C insurer CEO pay list in 2023  September 5th 2024

Industry to experience average annual insured nat cat losses of $151bn: Verisk - Artemis.bm

Global data analytics and technology provider Verisk has revealed that the insurance industry should be prepared to experience total average annual loss (AAL) from global natural catastrophes of $151 billion, driven by exposure growth, the impacts of climate change, and the increasing frequency of events coupled with economic and social inflation.

This information stems from Verisk’s Extreme Event Solutions 2024 Global Modeled Catastrophe Losses Report, which additionally observed that average exposure growth is expected to be 7.2%.

It is important to note that the Verisk AAL represents the scale of potential loss that can be expected, on average, in any given year.

Rob Newbold, president of Verisk Extreme Event Solutions, commented, “While actual annual insured losses over the past five years have been high, averaging $106 billion, they should not be seen as outliers.

“Our models show the insurance industry should be prepared to experience total annual insured losses from natural catastrophes of $151 billion on average, and well more than that in large loss years.

“With this information, (re)insurers can prepare for large loss years and truly own their risk with confidence, so they can be better positioned to manage these challenging years without risking their solvency.”

Floodbase's Flood Mapping Accuracy Outperforms National Oceanic and Atmospheric Administration (NOAA)

A study published today in Geophysical Research Letters demonstrates an 11% improvement in Floodbase's flood mapping accuracy as compared to leading methods, enabling more precise flood monitoring and reduced prices for parametric flood insurance.

Scientists and engineers from Floodbase, a leading flood intelligence and data provider for disaster managers and re/insurers, developed an AI technique that fuses satellite observations with data from the U.S. National Water Model (NWM). The peer-reviewed results demonstrate more accurate large-area flood maps of California's 2023 atmospheric river than those produced by NOAA's National Water Center.

This methodology paves the way for more robust multi-sensor fusion, which allows Floodbase to add new data sources and improve overall flood mapping accuracy.

"Flooding is the most common and costly weather-related disaster in the U.S.", said Dr. Beth Tellman, Co-Founder and Chief Science Officer at Floodbase. "This research builds on the already incredible capabilities of the National Water Center to detect and predict flooding over large land areas, and will enable more accurate flood monitoring, more affordable flood insurance, and more efficient disaster response across the U.S."

Tellman added, "Flooding costs the Federal government between $180 and $496 billion each year. This rapid inundation mapping technology will enable the most vulnerable communities and sectors to better understand and mitigate their flood risks."

ICEYE and Aon expand collaboration with flood and wildfire data agreement to enhance event response

ICEYE, a global leader in satellite-powered disaster management solutions, has announced that Aon, a leading global professional services firm, has expanded its data licensing agreement to include ICEYE's Flood Insights data globally and Wildfire Insights data for the US.

Under the agreement, Aon will incorporate ICEYE's near real-time flood and wildfire data into its event response capabilities for Reinsurance clients, to facilitate the loss analysis of catastrophic events. The high-resolution Insights data from ICEYE allows Aon to provide clients with detailed location-level analysis on flood and wildfire insights into damage of properties.

ICEYE's large constellation of NewSpace satellites provides access to a new level of persistent monitoring for any location on Earth, with synthetic aperture radar (SAR) technology delivering uninterrupted visibility, day and night, in any weather conditions and through smoke. Hazard and damage data is made available within hours of an event occurring with updated analysis provided at regular intervals as the flood or wildfire develops.

Stephen Lathrope, Senior Vice President for Solutions, ICEYE, added: "ICEYE is delighted to be expanding its data agreement with Aon and building on the success of the solutions we have supported. In an increasingly volatile natural catastrophe environment characterized by increasing frequency, severity, and complexity, rapid access to damage and hazard data will be critical. At ICEYE, we continue to expand our constellations and enhance our technology as we help shape the future of satellite-powered, data-driven disaster response."

Commenting on the announcement, Dan Dick, Global Head of Property Analytics for Reinsurance at Aon, said: "As climate risk further influences the behavior of weather events, Aon is committed to providing its clients with the most accurate and comprehensive catastrophe data and analytics. By integrating ICEYE's Flood Insights and Wildfire Insights into our event response solutions, we can provide enhanced clarity and confidence around the immediate financial impact of catastrophic events as they develop, ultimately leading to better business decisions for our clients."

Climate losses batter insurers

And reinsurers are taking a step back

As the planet warms and more natural disasters occur, insurers are facing an increasingly difficult time.

In 2023, for the fourth year in a row, global insured catastrophe losses exceeded $100 billion. The trend continues this year: In the first half, losses have reached $62 billion and are tracking well above the 10-year average of $37 billion, according to a recent analysis by Munich Re.

Ordinarily this shouldn’t trouble primary insurers, which can offset some of that risk by buying reinsurance. But it’s getting harder for them to do so. In a world of climate change, inflation and growing property exposure, reinsurers have ramped up their prices and are demanding more favorable terms, such as raising the level at which a policy will pay out.

And that means primary insurers are left holding the bag.

“Insurers are being forced to take on more risk,” said Charles-Marie Delpuech, an insurance credit analyst at S&P Ratings. “It’s a structural change in the overall market.”

And the numbers show just how much better reinsurers are doing as a result. S&P’s data on the top 19 global reinsurers shows that while their annual share of natural-catastrophe losses had historically been in the 20% range, it fell sharply in the last three years, sliding to about 10% in 2023.

The key reason is the reinsurance industry has become more averse to backstopping “secondary perils,” which are smaller but more frequent extreme weather events such as tornadoes, thunderstorms, fires and floods. These localized events are harder for the insurance industry to model and manage, partly because they’re driven by climate change.