Verisk: average annual cat losses to reach $150bn

The insurance industry should be prepared to experience insured losses from natural catastrophes of more than $150 billion a year in the future, according to modelling firm Verisk.

The company has increased its estimate for the global modelled insured average annual loss from natural catastrophes to $151 billion, up 13 percent from $133 billion in 2023.

The average annual loss predicts average annual insured losses over a long period of time and reflects the fact that actual insured losses in the last five years averaged $106 billion compared to less than $83 billion in the preceding five years.

“Verisk’s latest models estimate the global model insured average annual average loss from natural catastrophes at $151 billion, with non-crop losses making up more than three-quarters of this figure at $119 billion,” Verisk said in its annual report, “Global Modelled Catastrophe Losses”.

“This suggests that the insurance industry should be prepared to experience total annual insured losses, from natural catastrophes and crop, well over $151 billion on average.”

The report noted that while the largest single insured damage events were hurricanes or earthquakes, more than half of the modelled non-crop loss of $119 billion was made up of losses from extratropical storms, severe convective storms, wildfires and floods—so-called secondary perils.  

“Globally, these perils continue to erode earnings for insurers and in some cases for reinsurers, depending on markers and treaty structures.”

Persistent challenges

The report was discussed at Verisk’s annual London meeting held on September 5.

Verisk chief executive officer Lee Shaver said the increased estimate demonstrated that the insurance industry had experienced “significant headwinds” in recent years, including inflation, increased exposure values and replacement costs and an uncertain geopolitical risk landscape.

“Our clients have told us they want data more quickly.”

“These challenges persist against the backdrop of significant technological advancements disrupting all industries and putting pressure on insurers, reinsurers, policyholders and the entire insurance value chain,” he said.

“The accelerated digital transformation opens the door for tremendous opportunities to reimagine what’s possible and shape the future of the industry.

“Our clients have told us they want data more quickly, almost instantaneously, and updated sooner.”

As a result, Verisk is releasing a new extreme event modelling platform called Verisk Synergy Studio which will replace its existing Touchstone platform in 2026. 

Rob Newbold, Verisk president, said Synergy Studio would offer superior modelling enabled by cloud technology and best-in-class analytics, alongside real-time event response.

The platform will use artificial intelligence to generate climate models across continents and lines of risk, attendees heard.

For more news from the Rendez-Vous de Septembre (RVS) click here.

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