Our H1 2024 Natural Catastrophe review highlighted how in the first half of the year global natural catastrophes caused extensive damage, with the U.S. experiencing above-average tornadoes, hailstorms, and straight-line wind events, totalling over $30 billion in insurance claims. Severe flooding affected Brazil, East Africa, Australia, and Germany, while Japan and Taiwan were hit by significant earthquakes. This follows on from a “new normal” in 2023, another year in which insurers saw over $100 billion in claims. A shift is also emerging in the factors driving these losses. In 2023, more than 30 events collectively contributed to over $100 billion in losses, with the bulk of the total coming from smaller to mid-sized events. Notably, the largest event— the devastating Turkey/Syria earthquake—accounted for just $6 billion in insured damages. In the first half of 2024 there were nearly 20 individual billion-dollar economic loss events, including a fast start to the US referencing as detailed in our work with Columbia University. Hurricane Beryl saw a record-breaking early start to the Atlantic hurricane season and whilst subsequent weeks have been relatively inactive, our work with James Done at NCAR details why the ceiling on the Atlantic hurricane season numbers was set so high.
AI is already significantly changing the insurance industry and in this newsletter we feature two case studies from work done with WRN partners at Loughborough University. Advanced AI models can analyze diverse datasets—such as property details, historical claims, and environmental data—to provide precise risk evaluations and customized insurance pricing. It can use satellite imagery, drones, and smart sensors to assess property conditions, identifying potential risks like structural weaknesses or fire hazards. This allows insurers and risk engineers to proactively ensure properties meet local building codes and safety standards, minimizing potential claims. By automating risk assessment, AI reduces human error and speeds up underwriting, leading to more accurate policies and faster policy issuance. Additionally, AI-driven tools can continuously monitor properties and alert insurers and clients to any changes that might affect compliance or risk levels.
2024 was already marked as a historic year with record numbers of people heading to the polls across the globe. Geopolitical volatility was one of the biggest risks identified at the start of the year by a WTW report that set out potential consequences the ‘year of elections’ could bring alongside continuing US-China tensions and ongoing war in Europe. Political violence risk in Europe and North America has been characterized by assassination attempts and civil unrest. This has real impact on business and trade. In particular, the semi-conductor industry remains at the sharp end of much of this risk, navigating increased complexity in production and global supply chains.
As always, thank you for reading and please do get in touch with any questions.
Stuart Calam
WTW Research Network
Table of Contents
- The new normal: $100 billion in insured Nat Cat damages
- The impact of climate transitions on the construction industry
- What’s driving political violence risk in Europe?
- The metaverse in retail, leisure and hospitality: After the hype, where next?
- Safeguard your organization from wildfire risks using effective risk management strategies
- People, tech, risk and leadership in the new world
- Managing flood risk: Strategies for protection and resilience
- Predicting renewable energy droughts and surplus by modeling tropical Pacific climate
- After CrowdStrike – Short-term fixes and long-term cyber risk solutions
- Why and how to apply an enterprise risk management framework to geopolitical risks
- Safeguarding your organization: effective strategies for windstorm risk management
