Zurich based independent provider of industry-wide European catastrophe insurance loss data and indices to reinsurers and ILS specialists, PERILS AG, has added Dirk to its list of European windstorms to investigate, taking the tally to three so far this season.
When PERILS places a catastrophe event ‘under investigation’ it means that the event has the potential to result in a market-wide insured industry property loss exceeding €200m. PERILS makes an initial investigation of a storm’s potential to cause a sufficiently large insurance industry loss as the first step in its process. If it becomes apparent that the storm will likely cause a €200m market-wide loss then it will be reported on, based on information PERILS receives from data providing insurance companies.
European windstorm Dirk struck the UK, France and Spain on the 24th December, bringing winds gusting to near 100mph and significant rainfall. In the UK this rainfall led to a number of major flooding incidents, some of which were in population centres where there was a considerable amount of damage caused.
This takes the number of European windstorms investigated by PERILS AG this season to three already. It is very early in the season for this number of major storms to have occurred, compared to recent years, but the number could rise even further. Another storm, named Erich, has been impacting Ireland, the western and northwest UK today, again bringing strong winds and more heavy rainfall. At the moment Erich does not look to have caused sufficient impact to be investigated by PERILS.
The 2013/14 European windstorm season is beginning to look like one of the most active in a while. So far none of the events are thought to have been sufficiently damaging to impact any European windstorm catastrophe bonds, but as losses accumulate from a number of damaging storms the impact is almost certain to trickle down to reinsurers. Once losses impact reinsurers we may begin to see some losses being paid from within the ILS fund space where a number of managers participate in major European reinsurance programs on a collateralized basis.
Dirk caused at least 750,000 power outages across the European countries it impacted, according to Aon Benfield’s Impact Forecasting unit, as well as resulting in at least six deaths.
The update from Impact Forecasting said:
Prior to Dirk’s arrival, the UK Met Office issued 162 severe flood warnings and 276 flood alerts across England and Wales as heavy rains forced river levels to swell. More than 1,000 homes were flooded in southern England following multiple rivers overflowing their banks (including the Medway, Mole, Stour, and Severan rivers). The Environment Agency cited the floods in Kent and Sussex as the worst since 2000, while Leatherhead and Dorking also reported heavy flooding. Wind damage was prevalent in the UK as well, with winds gusting beyond 130 kph (80 mph) downing a large volume of trees and power lines. Britain’s Energy Networks Association reported that more than 420,000 power outages occurred at the height of the event. Five people were killed in the UK.
Elsewhere, one person was killed in France as winds gusted up to 150 kph (90 mph) along coastal locations. More than 240,000 power outages occurred, with most registered in the Brittany and Normandy regions. At the peak, Meteo France issued “Orange” level weather alerts for at least 23 of the country’s 96 departments. Excessive rains prompted rivers to swell as hundreds of properties were inundated. In Spain, nearly 90,000 customers lost electricity in Spanish Galicia due to high winds. Additional damage was cited in Poland and parts of Scandinavia.
Beyond property damage, Dirk was responsible for significant travel delays and cancellations throughout Europe. Travel via rail, ferry and air was all disrupted during the peak of holiday travel on December 24. England’s Network Rail reported that its infrastructure damage was worse during Kirk than WS Christian.
Aon Benfield said initial reports from Europe suggest that the financial impact from European windstorm Dirk will be lower than that caused by Christian and Xaver.
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