October 2023 ยป thefivestar.com
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October 2023
S P O N S O R E D C O N T E N T
U.S. 2023 BILLION-DOLLAR WEATHER AND CLIMATE DISASTERS
pounded by inflationary pressures and
labor shortages.
Increasing Complexity of Exposures
I
n addition to the inflationary pres-
sures, risks are becoming more
technologically advanced and thus more
expensive to replace or repair. A good ex-
ample of this is the increasing popularity
of rooftop solar panels, which are easily
damaged by wind and hailstorms.
Reinsurance Market Conditions
A
long with some increases in the cost
of reinsurance coverage, there has
also been an uptick in the point at which
some reinsurers will begin to absorb loss-
es. This means that primary insurers are
faced with assuming a higher loss amount
before reinsurance kicks in. Reinsurers are
now typically seeking to start at the level of
catastrophe losses that occur around once
every 10 years, rather than the more typical
starting point of one-in-three-year or -five-
year events, according to a January report
from Gallagher Re.
5
Conclusion
T
he significant rise in the scale of losses
that secondary perils are having on
the insurance industry will likely have
far-reaching impacts. While insurers will
find ways to adapt and develop solutions
to underwrite the evolving risks, con-
sumers who live in areas not previously
thought of as catastrophe-prone, but
which now are contributing to large-loss
events of $1 billion or more, will likely face
increasing premiums, more restrictive
coverage options, and reduced availability.
1
https://www.swissre.com/press-release/Severe-thunderstorms-account-for-up-to-70-of-all-insured-natural-catastrophe-losses-in-first-half-of-2023-Swiss-Re-Institute-estimates/cea79f3c-6486-41a8-9c6e-09df260efe30
2
https://www.noaa.gov/stories/july-2023-brought-record-high-temperatures-devastating-floods-across-us
3
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/insurers-hit-hard-as-us-hailstorms-grow-more-severe-costly-in-warming-climate-76991910
4
https://www.freddiemac.com/research/insight/20221109-migration-environmentally-risky-areas-consequence
5
https://www.wsj.com/articles/wildfires-and-thunderstorms-are-throwing-insurance-market-into-turbulence-2c62ab7b?page=1
Company Information: National General
Lender Services delivers an award-win-
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draft solutions. Our unique approach is
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the client and their customers. To learn
more, visit NationalGeneral.com/Lender-
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