Thomas Blunck, member of the Board of Management
In the Asia-Pacific region, natural disasters resulted in overall losses of approximately US$ 7bn, of which roughly US$ 3bn was insured
Earthquake in Turkey and Syria was by far the most devastating natural disaster in the six months of the year
Munich:
The first half of 2023 is a continuation of the recent run of years with high losses. While the overall losses of US$ 110bn were lower than those in the first half of 2022 (US$ 120bn), they were still well above the average for the last ten years (US$ 98bn, inflation-adjusted).
The same is true for the insured losses of US$ 43bn (previous year: US$ 47bn; ten-year average for half-year losses: US$ 34bn).
Less than 40% of overall losses in the first half of the year were insured – evidence of the large insurance gap that persists in many countries for multiple natural hazards. Insurers bore around 35% of worldwide losses in terms of the average half-year losses in the period 2013–2022.
What were the costliest natural disasters in the first half of the year?
The earthquake in Turkey and Syria was by far the most devastating natural disaster in the six months of the year. On 6 February, a series of tremors struck southeastern Turkey close to the border with Syria. The two strongest tremors had magnitudes of 7.8 and 7.5 respectively and were the strongest earthquakes in Turkey in decades.
A very large number of buildings, roads and bridges were destroyed. Around 58,000 people lost their lives. As a result, the global number of victims of natural disasters in the first half of the year (some 62,000) was higher than it had been since 2010. Overall losses from the earthquake in both countries are estimated at around US$ 40bn, with Syria accounting for roughly US$ 5bn.
“The earthquake disaster in Turkey and Syria illustrates the importance of robust and safe buildings. The primary aim must be to save lives. The next step is to reduce losses in such catastrophes. We also need to adapt to handle the consequences of global warming in the form of more frequent or more severe weather disasters much more effectively – by employing appropriate construction methods, selecting sites that can withstand future impacts and by having insurance to cover the immediate financial consequences. This is starkly illustrated by the loss figures for the first half of 2023,” said
Thomas Blunck, member of the Board of Management.
Despite the establishment of the Turkish Catastrophe Insurance Pool (TCIP), which provides compulsory insurance for residential buildings in Turkey and now has insurance penetration of more than 50%, the insured portion of overall losses totalling around US$ 5bn remained small.
The sum insured under the TCIP is limited to TL 640,000 per residential unit (equivalent to approximately US$ 34,000 at the time of the earthquake). Commercial enterprises are not included in the pool.
Similarly, infrastructure is generally not insured. Particularly in a country as exposed to earthquakes as Turkey, it would be both desirable and practicable to have a wider spread of insurance cover, to ensure that those affected – governments included – can recover more rapidly from the financial losses.
Asia Pacific
In the Asia-Pacific region, natural disasters resulted in overall losses of approximately US$ 7bn, of which roughly US$ 3bn was insured.
In New Zealand, high losses were caused by flooding following heavy rainfall, as well as Cyclone Gabrielle making landfall. Assets worth some US$ 4.3bn were destroyed, of which around US$ 2.9bn was insured.
Large areas of China and Southeast Asia suffered recurrent heat waves between March and June, breaking many local and seasonal records. Tianjin, a city with over 10 million inhabitants, measured a record high of 41.4ºC.
For Asia as a whole, the months of February to June were the fourth warmest on record, as was June alone.
Cyclone Freddy claimed a large number of lives in Mozambique and other countries in southeastern Africa. Freddy was probably the longest active tropical cyclone since records began. It formed at the start of February to the north of Australia and then traversed the entire Indian Ocean.
After making landfall in Madagascar, it meandered back and forth between Madagascar and Mozambique. The southeastern African country was then impacted a second time by the cyclone. Some 860 people lost their lives.
Overall losses in Mozambique and neighbouring countries came to approximately US$ 1.5bn.
Due to the very low insurance penetration in low-income countries, however, only a negligible portion of the losses was insured.