What is the Risk in Europe from Winter Storms?
As the 2003-04 European winter storm season gets underway it is an excellent time to re-examine this complex and potentially costly peril. The insurance industry will undoubtedly remember 1999, the year Anatol, Lothar, and Martin paralyzed much of the continent. Insured losses from Lothar and Martin caused roughly 8 billion Euros in France alone. Using a methodology developed by Denmark’s Risø Labs for estimating return period winds, AIR estimates that the wind speeds associated with Lothar and Martin have a return period of roughly 100 years. Clearly, this is not the worst case scenario and reinsurers must be prepared to handle larger losses. Decisions on the management of insurance and reinsurance portfolios worth hundreds of millions of dollars are made daily based on data derived from catastrophe models. Most models consist of three primary components: hazard, building vulnerability, and loss estimation. Modelers must incorporate a detailed understanding of both the science (meteor
