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Record-Breaking Losses: Natural Disasters Cost $380 Billion in 2023

FINANCERecord-Breaking Losses: Natural Disasters Cost $380 Billion in 2023
  • The global economic damage due to natural disasters reached 380 billion dollars last year, according to Aon’s “Climate and Catastrophe Insight” report.
  • The value of insured damages amounted to 118 billion dollars, which is only 31 percent of the total damages.
  • Earthquakes caused the most significant economic losses, whereas convective storms proved to be the costliest for insurers.

The year 2023 was record-setting in terms of the scale of economic losses caused by natural disasters. According to Aon’s annual “Climate and Catastrophe Insight” report, 398 global events of this type inflicted damages amounting to 380 billion dollars – 22 percent above the average for the last twenty-four years. By comparison, this was 355 billion dollars in 2022. The most expensive were strong earthquakes and violent convective storms in the United States and Europe.

“The purpose of the report is to identify the most urgent needs associated with climate change, the occurrence of increasingly violent atmospheric phenomena and natural disasters, as well as their growing costs to the economy. This will help public and private organizations make better decisions in managing these types of risks and adequately adjusting insurance. As our report shows, the current approach to the issue does not guarantee sufficient financial protection, and its scale is likely to grow year by year” – says Dominika Kozakiewicz, CEO of Aon Poland.

Insurance covered only 1/3 of the losses

Last year, global insurance losses were 31 percent higher than the average for the 21st century, exceeding the 100 billion dollar threshold for the fourth year in a row. And this is still a drop in the ocean of needs. Insurance policies covered only a third of total losses – their total value is “only” 118 billion dollars. The so-called “coverage gap” was therefore as high as 69 percent (for comparison, it was 58 percent in 2022). This indicates an urgent need to significantly expand insurance protection.

A record number of natural disasters also yielded substantial damage – 66 events causing economic losses exceeding one billion dollars and 37 events causing over a billion in insured losses. The costliest insurance events related to weather in history were recorded in New Zealand, Italy, Greece, Slovenia, and Croatia.

The 10 events that caused the greatest losses in 2023:

Date Event Location Fatalities Economic losses (billion $) Insured losses ($ billion)
6.02-20.02 Earthquakes
in Turkey and Syria
Turkey and Syria 59 272 92.4 5.7
22.05-30.09 Floods
in China
China 370 32.2 1.4
25.10-26.10 Cyclone Otis Mexico 52 15.3 2.1
1.01-30.06 La Plata Drought Brazil, Argentina, Uruguay 15.3 1.0
1.01-31.12 Drought in the USA USA 14.0 6.5
13.05-17.05 Flood in Emilia-Romagna Italy 15 9.8 0.6
1.03-3.03 Violent convective storms USA 13 6.2 5.0
21.07-26.07 Violent convective storms Europe 11 5.8 3.0
8.08-17.08 Hawaii Fires USA 100 5.5 3.5
31.03-1.04 Violent convective storms USA 37 5.5 4.4
All other events ~35 500 178.0 92.0
Total ~95 000 380 118
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