Stormy days ahead

There is no doubt that losses from windstorm events are going to increase worldwide, both from hurricanes in the United States and from winter storms in Europe. The figure below provides a striking indication of expected losses as a function of their occurrence probability. How does this increase come about? It is due to the increasing concentration of values and also to the changes in weather patterns as a result of global atmospheric warming. There is hardly any line of insurance that has such a high loss potential (in terms of single loss events) as windstorm insurance.

Since the attitudes of the public, industry, and the authorities are significantly influenced by insurance terms and conditions, one of the insurance industry‘s tasks is to advocate more effective protection. What measures are suitable in individual cases? What prices must be charged and what terms and conditions are needed to cover the risk adequately? These are all questions that need to be answered.

The suitable time to prepare for a changing risk situation is the period of "calm before the storm", because when the storms have already begun, it is too late, as past events have so frequently demonstrated.

Windstorms worldwide: expected losses as a function of their occurrence probability

The graph of expected losses as a function of occurrence probability or return period clearly shows that hurricanes represent the most expensive windstorm hazard in the United States. This is due, on the one hand, to the very high wind speed they can attain over large areas and, on the other, to the concentration of values in US coastal regions like those along the Golf Coast or on the southeast coast (e.g. Florida). These two factors are not encountered in this combination either in Japan or in Europe.