Intensifying hazards, fiercer weather in our backyards, and baseball-sized hail

Extreme weather is sending powerful signals about climate change's potential to increase natural catastrophe losses. Storms are growing fiercer, floods more frequent. In this edition of degREes, we survey recent weather events and highlight how climate mitigation and adaptation, informed by deep risk insights and bolstered by re/insurance protection, are needed as we chart a path forward.

Also in this newsletter: Weather-related threats in our backyards are a sign of what's happening practically globally; parametric payouts for fast recovery; an upcoming webinar on Climate Change and the Impacts on Life and Health; plus Swiss Re's new CEO.

Hazard intensification

In April, northeastern US residents experienced a common frustration: Their homes were underwater, again. Just weeks earlier, a huge hailstorm damaged Texas solar plants. Parts of flood-prone Pakistan were submerged in February, while Storm Henk ploughed into the UK to start 2024, swelling the Thames, Severn and Avon rivers as a month's worth of rain fell in four days.

With a changing climate, floods, winter storms, severe thunderstorms and tropical cyclones are intensifying, something Swiss Re Institute recently highlighted in its report "Changing climates: the heat is (still) on". Our experts conclude climate-related hazard intensification is likely to play a bigger role in future economic losses, which to date have been fuelled by factors like urbanisation and growth in vulnerable regions.

The US, along with Asian nations including the Philippines, are among the most-exposed regions. As one Pennsylvania lawmaker said this month about his constituents' dilemma: "We're seeing more of these severe storms happen and happen with greater frequency. Frankly, when you have a large amount of rain in a short amount of time, it really does tax existing infrastructure." Mr. Senator, we couldn't have said it better ourselves.

"A powerful signal"

As Swiss Re raises awareness about hazard intensification, and critically, the climate mitigation and adaptation needed to make our societies more resilient, many of our 14,000 global employees are already experiencing this first-hand.

In his article "A global threat that hits close to home", Mohit Pande , our top US property underwriter, offers his personal perspective on rising flood risk in his community. Pande writes that intensifying perils in our own backyards "are an early but powerful signal that the critical work of preparing for fiercer, costlier climate hazards on a global scale has only just begun."

Risk insights

As climate-related weather hazards intensify, imperiled communities are already considering relocating, in particular due to increased flooding threats. For instance, the US government is contributing millions of dollars to help Native American tribes on the Pacific Coast move to higher ground. In Australia, residents of flood-prone locations hit repeatedly by swollen rivers are considering similar measures "to create a new place for people to call home," as the regional government there described one plan. These are just two examples of people having to make difficult decisions forced upon them by a changing climate.

In a recent article published in Insurance Post , Swiss Re Global Clients and Solutions CEO Moses Ojeisekhoba highlights the importance of tapping sophisticated risk insights, including from Swiss Re's CatNet solution, to guide efforts to prepare for evolving climate-related risks, ideally before tough choices like fleeing rising waters are the only ones left. As Moses writes, "A proactive, insights-driven approach, one that informs efforts to mitigate the forces driving climate change while supporting adaptation measures needed to prepare for its enduring effects, is crucial to protect our communities and preserve our options." 

Baseball-sized hail – and protection innovation

While Texans love their baseball, they could do without baseball-sized hail, a destructive byproduct of severe thunderstorms that increasingly threaten the Lone Star State and beyond. Italy, for instance, last year suffered USD 5.5 billion in damages, 20-fold the previous hail loss record. Recently, Swiss Re Institute documented this evolving peril in its sigma report "Gearing up for today's and tomorrow's weather risks." In 2023, over half of the USD 108 billion in global insured natural catastrophe losses came from hail-laden thunderstorms, an unprecedented tally. This underscores why models must evolve to keep pace with volatile weather that may be influenced by climate change, to ensure we have the best risk knowledge to protect vulnerable, valuable assets including renewable energy installations.

In one example of how organisations are addressing their hail risks, Baylor University in Waco, Texas, sought out a parametric insurance solution from Swiss Re Corporate Solutions. After an April 2023 storm, the payment from Swiss Re arrived in less than two weeks. "This gave us the opportunity to recover from our losses much quicker, leading to less stress and more budget certainty," said Paul Fox, Baylor's senior risk management director.

For more about how this worked, have a read.

Climate change and the impacts on life and health

The most visible consequence of climate-driven extreme weather is often property destruction. But the United Nations says climate change's impact on human health could mean 250,000 more annual deaths from disease, heat, or drought. Swiss Re experts analysed climate change's impact on health in this 2023 report, and they just contributed to The Geneva Association 's new publication "Climate Change: What does the future hold for health and life insurance?" This Geneva Association report found that insurance underwriting that incentivises risk-reducing behaviours and innovations like parametric insurance are among our industry's contributions to protecting public health from a warming planet.

Swiss Re has an upcoming public webinar on the complex subject of climate and health on 21 May where experts will provide insights. To join, you can sign up here.

And in case you missed it…

Swiss Re's new Group Chief Executive Officer is also a familiar face: Andreas Berger , head of Swiss Re Corporate Solutions , replaces Group CEO Christian Mumenthaler starting on 1 July.

As Group CEO, Berger pledged to further strengthen Swiss Re's franchise and help clients reach their goals. Mumenthaler, a Swiss Re employee for 25 years, spent the last eight as CEO. His engagement including to establish Swiss Re as a leading industry voice on decarbonisation won him respect from employees as well as recognition beyond the company, including in Time magazine. "The timing is right," Swiss Re Chairman Jacques de Vaucleroy said, on the transition. "The Board unanimously determined that Andreas Berger is the right person to build on the firm's current momentum and lead Swiss Re into the next phase of its development."

Cautionary note on forward-looking statements

Certain statements and illustrations contained herein are forward-looking. These statements (including as to plans, objectives, targets, and trends) and illustrations provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to a historical fact or current fact. Further information on forward looking statements can be found in Terms of Use section on Swiss Re's website.