After Katrina in 2005, Hurricane Ian was the most expensive catastrophe of all time

Remains of destroyed restaurants, shops and other businesses are seen nearly a month after Hurricane Ian made landfall in Fort Myers Beach, Florida, the United States, October 26, 2022. REUTERS/Marco Bello

Marco Bello | Reuters

Hurricane Ian, a Category 4 Atlantic hurricane that struck Florida and South Carolina earlier this year, was the costliest catastrophe and second-largest insured loss of all time, behind Hurricane Katrina in 2005. This emerges from a new report by reinsurer Swiss Re.

Ian caused $50 billion to $65 billion in insured losses after it made landfall in late September with extreme winds and torrential rain in western Florida. The storm surge and downpour hit a densely populated coastline during an otherwise tame hurricane season.

The analysis found that extreme weather disasters, including winter storms in Europe, floods in Australia and South Africa, and hailstorms in the US and France, caused an estimated total economic damage of US$260 billion in 2022, well above the 10-year average from 207 US dollars lies billion.

Insurance losses from catastrophes were also high, with claims estimated at $115 billion, higher than the 10-year average of $81 billion, the report said. Insured losses from extreme weather events have risen as climate change triggers more frequent and destructive hurricanes, floods and wildfires, the reinsurance company said.

“Urban development, wealth creation in disaster-prone areas, inflation and climate change are key factors driving extreme weather events into ever-increasing losses from natural catastrophes,” said Martin Bertogg, Head of Catastrophe Risks at Swiss Re.

“When Hurricane Andrew struck 30 years ago, there had never been a $20 billion loss before,” Bertogg added. “There have been seven such hurricanes in the past six years.”

Thierry Léger, the group’s chief underwriting officer, said demand for insurance is increasing as catastrophes become ever more costly, while “the protection gap remains wide”.

The insurance industry also struggles with so-called secondary perils, or catastrophes, which insurers have historically described as common but relatively inexpensive. In the course of climate change, these events are increasingly leading to losses in catastrophe insurance. For example, secondary perils such as floods and hailstorms caused insured losses of over US$50bn this year, according to Swiss Re.