The (re)insurance industry saw above-average insured losses due to a number of large-scale disasters across almost every continent in the first half of 2022, as detailed by Aon’s most recent Global Catastrophe Recap report. This saw total insured losses of $39bn (18% above the average), around half of which came from the US, with full loss development yet to come as the effects of large-scale events are fully realised. 

Weather related perils were the biggest cause of insured losses. All major events with a loss-value in excess of $1bn were weather-related, with the exception of a single earthquake event off the coast of Japan. This is not only the result of persistent La Niña’s which originate in the Pacific regions, but also a clear sign of climate change, of which the consequences are being felt around the globe, evidenced by the record-breaking heatwaves we are experiencing in Western Europe this week.

The rise in nominal losses this year can also be attributed to high inflation levels which, complicated by supply chain issues as a result of the pandemic and the war in Ukraine, has exacerbated the cost of rebuilding in the aftermath of significant events. This is illustrated by the protection gap which has widened to around 57%, as around half of economic losses were not covered by insurance.

It is anticipated that losses in Q3 (the period in which the highest losses each year are often seen) will continue to rise and could lead to a challenging renewal season for the (re)insurance industry.