Monday, October 26, 2015

The Enormous Economic Damages If Historical Windstorms Were To Hit Europe Today: Swiss Re

From Artemis:

Historical EU windstorm losses could be unprecedented today: Swiss Re
Leading reinsurer Swiss Re has brought to light the potential for unprecedented insurance industry losses from three historical European windstorms if they occurred today, underlining that the costs to the insurance and reinsurance industry would be extremely significant.

European windstorms have the scope to be far-reaching, long-lasting and extremely damaging to economies, societies and the risk transfer markets that seek to protect against the peril.
And while many parts of Europe are considered developed regions of the world, especially when compared to parts of Asia, Latin America and India, for example, insurance penetration levels could still be greater across many parts of Europe, somewhat highlighted by the potential insured losses provided by Swiss Re in its latest report, ‘Winter storms in Europe: messages from forgotten catastrophes.’

For its research, reinsurance firm Swiss Re selected a storm from March 1876, an event from late January 1884 and finally, a European windstorm that took place during February 1894, all of which significantly impacted several parts of Europe and caused widespread, lasting damage.
The first storm, which the report describes as Lothar’s Big Brother, Lothar being a storm that impacted Europe in December 1999, caused damages across France, Germany, Belgium, the U.K., the Netherlands, and Luxembourg.

Swiss Re predicts that should the 1876 storm, which crossed “almost precisely over London, Amsterdam and Hamburg,” have occurred in 2014, estimated insured property losses would amount to $10.037 billion, with more than $4 billion worth of losses coming from France alone.
Important to note here, and as is the case with the insured loss estimates provided for all regions, from all three of the selected historical European windstorms, Swiss Re’s predictions only include insured property losses.

Meaning that other insured business lines, like motor, engineering, agriculture and so on, are not included, suggesting that total insured losses from the events could be substantially higher than the ones provided in the report....MORE
They should have modeled the Great Storm of 1703.
 “no pen could describe it, nor tongue express it, nor thought conceive it unless by one in the extremity of it”.
-Daniel Defoe, The Storm
Apparently it was pretty bad. $100 billion, maybe?