S&P: reinsurers dodge severe convective storm losses amid rising threats

S&P said that last year marked the fourth consecutive year with global insured natural catastrophe losses topping $100 billion. However, these losses were driven more by frequency than severity.

In 2023 and the first half of 2024, insured losses from secondary perils, especially severe convective storms, surged to unprecedented levels. Primary insurers bore the brunt of these losses, while reinsurers' strategic positioning largely shielded them.

“While we haven't taken any negative rating actions on any reinsurers due to natural catastrophe losses in the past 18 months, we believe it will be crucial for reinsurers to maintain underwriting discipline amid robust demand for natural catastrophe reinsurance” S&P said in a statement.

S&P Global Ratings believes the events of 2023 will influence risk management and mitigation, as primary insurers seek solutions to these loss trends beyond mere rate increases, such as refining risk models to better account for secondary perils, enhancing exposure-data quality, improving segmentation and managing exposure to hazard prone areas, increasing deductibles, or requiring better physical durability in assets insured. This is particularly crucial given that SCS were the most expensive peril in 2023 and the first half of 2024.

For more information or to get a copy of the report contact S&P.

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