Clustered storms pose a challenge for the insurance industry due to claims allocation confusion
The initial estimate of the insured property market loss attributed to February 2022’s European windstorm series is €3,289m (£2,783m), according to claims data collected from impacted insurance companies that has been published by independent Zurich-based event loss data firm Perils.
The European windstorm series consisted of three storms that affected the British Isles and continental Europe between 16 and 21 February 2022. This included Storms Dudley, Eunice and Franklin, according to the UK Meteorological Office.
As a result of these storm events, approximately 1.8 million individual insurance claims were filed in total, reported Perils – the majority being for non-structural damage.
Germany experienced the majority of losses, followed by the Benelux states, the UK and France.
The impact of these storms on the property insurance market represents the largest European windstorm loss since Kyrill in January 2007.
Based on actuarial analysis of European windstorm activity over the last 43 years, a loss of this size might be reached or exceeded approximately once every nine years on average, Perils noted.
The windstorm series was driven by a strong jet stream, which acted as a conveyor belt for low pressure systems from the North Atlantic to move across to the British Isles and into Europe.
Although not uncommon, the clustering phenomena of three successive storms poses a challenge for the insurance sector because it makes it difficult to precisely allocate insurance claims to a specific storm - especially when the events are occurring in a short space of time across similar areas.
Furthermore, event definition clauses for reinsurance purposes are not homogenous in Europe and can include meteorological conditions, as well as loss aggregation periods, ranging from 72 hours up to 168 hours.
Given these factors, Perils has reported the losses from the storm series as a single insurance event.
Luzi Hitz, chief executive at Perils, said: “Our industry loss and exposure data, which are not modelled but based on ‘ground-truth’ collected from insurance companies, can form a reliable foundation to better understand and assess natural catastrophe risk.
“From day one, this has been our primary focus and we are convinced that data sets such as those released today on the European storm series provide critical information to better understand and manage catastrophe risk in the insurance industry.”