Even small changes could have created industry-shifting events that affect business’ bottom lines
Large- and medium-scale weather events like tropical cyclones and severe convective storms have dominated global insured losses in recent decades. Between the early 1980s and early 1990s, European windstorms accounted for nearly 15% of global insured losses. However, that contribution decreased in the following decades. But European windstorms remain a driver of global insured losses. In fact, many historical storms have narrowly avoided becoming major insured loss events.
This has led some to wonder if the risk associated with this peril has diminished or if it is just a consequence of natural variability. The latter theory feels especially timely considering how active the 2023 – 2024 season has been to date, with 10 storms impacting the UK, Ireland, or the Netherlands named by the Met Office from Storm Agnes to Storm Ciarán and then Storm Joceyln.
In the recently published CoreLogic white paper three counterfactual analyses look back at historical European windstorms activity to examine what could have happened had historical storm or meteorological conditions differed.
Learn how European windstorm risk can impact your enterprise risk management strategy
These analyses use the CoreLogic European Windstorm Model (Eurowind™), which quantifies the risk from windstorms across 24 European countries and the North European offshore region, to understand if risk has fundamentally changed or if Europe has been relatively fortunate.
- The first approach in this white paper investigates the impact of historical European windstorms on current market exposure using the Eurowind historical catalogue, which spans 63 years from 1960 to 2022.
- The second approach uses the stochastic event set within the Eurowind model, which was created by applying a proprietary physical perturbation scheme to historical event wind footprints, to generate realistic synthetic storms that are meteorologically credible and physically possible.
- The third approach uses a catalogue of extratropical cyclone footprints created by the University of Birmingham using the European Centre for Medium-Range Weather Forecasts’ seasonal forecast ensemble system, SEAS5.
The results indicate that historical European windstorm losses could have been much higher under altered weather conditions and that the threat of an imminent significant European event remains.
Similarly, the counterfactual analyses demonstrate that European windstorm risk has not significantly diminished and that the relatively low losses of recent years can be explained in terms of natural variability of hazard.
