AIR: European windstorm Xaver insured loss €700m to €1.4 billion

by Artemis on December 12, 2013

Risk modelling firm AIR Worldwide has released an estimate of the insurance industry losses from last weeks European windstorm Xaver. AIR estimates an insured loss of €700m to €1.4 billion but only from Xaver’s wind impact, not including surge or flood.

AIR Worldwide said that the majority of the losses within its range of €700m to €1.4 billion (approximately $965m to $1.9 billion) are from damage sustained in Denmark, Germany, and the UK. Some losses also occurred in the Netherlands, Belgium, Sweden, and Norway. The only other estimate available to date is Credit Suisse’s of €1.4 billion to €1.9 billion including flood and surge damages.

“Xaver brought with it a potent combination of hurricane-force gusts, torrential rains, and storm surge, which caused significant travel disruption, power outages, and property damage across parts of the UK, Germany, the Netherlands, Belgium, Denmark, southern Sweden, and Norway,” commented Dr. Gerhard Zuba, senior principal scientist, AIR Worldwide.

Dr. Zuba continued; “Reported observation data for the storm include gusts up to 148 km/h and 158 km/h in areas along the Danish and German coasts. Comparisons have been made between Xaver and winterstorms Christian, which struck earlier this year, and Anatol in 1999, which also caused significant losses in Denmark. The wind speeds of Xaver were generally not as intense as either of these storms, however.”

Xaver brought hurricane force winds to a large part of Northern Europe. Xaver exhibited a period of very rapid strengthening, often called “explosive cyclogenesis” and typical of a storm with a rapid drop in central pressure. AIR said that Xaver’s central pressure dropped from approximately 1010 millibars late Thursday to a minimum pressure of 975 millibars in just 24 hours. At peak intensity over the Baltic Sea the central pressure dropped to 960 millibars.

Dr. Zuba noted; “Xaver is the second severe storm of the 2013/2014 European winter storm season. The first, late October’s Christian, also caused significant damage over a large part of Europe. By comparison, the 2012/2013 season was relatively quiet, while the season before that saw a series of storms impacting Europe. This sort of clustering is typical for the region, where seasons with very low activity and corresponding damage can be followed by seasons with very high activity and correspondingly high accumulations of insured losses.”

AIR said that structural wind damage from Xaver would be limited but because the storm impacted such a wide area the overall volume of claims would likely be significant. Given the record storm surge, despite the effectiveness of flood defences, flood and coastal storm surge losses are expected to be reasonably significant, explained AIR.

AIR’s industry insured loss estimates reflect:

  • Insured physical damage from wind to onshore property (residential, commercial, industrial, agricultural, auto), both structures and their contents
  • Losses to insured forestry in Norway and Sweden

AIR’s insured loss estimates do not include:

  • Losses from coastal storm surge and inland flooding
  • Business interruption and additional living expenses (ALE) for residential claims for all modeled countries except the UK
  • Losses to uninsured properties
  • Losses to infrastructure
  • Demand surge (AIR’s demand surge function is not triggered by this event)

The only other insured loss estimate released yet for European windstorm Xaver is the one we wrote about earlier from Credit Suisse. Credit Suisse said it had modelled flood impacts in its estimate as well, so AIR’s range of €700m to €1.4 billion excluding flood and surge, seems reasonably aligned with Credit Suisse’s estimate of €1.4 billion to €1.9 billion including flood and surge damages.

It must be stressed that these are still very early estimates of insured losses from Xaver. The insurance industry loss from windstorm Xaver will become clearer as more information emerges and claims are filed over the coming weeks.

Read our other European windstorm Xaver coverage, most recent first:

- Credit Suisse puts windstorm Xaver insured loss at €1.4bn to €1.9bn

- Flood defences keep windstorm Xaver insured losses down

- ILS fund managers expect no cat bond impact from windstorm Xaver

- European windstorm Xaver; updates from risk modellers

- PERILS to assess European windstorm Xaver industry loss potential

- European windstorm Xaver brings another reminder of winters threat

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