European windstorms under investigation, Egon a $100m+ loss

European windstorm Egon and European windstorm Barbara are both under investigation by PERILS AG, and Aon Benfield’s Impact Forecasting unit said Egon will likely result in an insurance industry loss of over $100 million.

PERILS AG, the provider of industry-wide European catastrophe exposure, insurance and reinsurance industry loss data and indices, has now placed three European windstorms under investigation in the current season, having investigated November’s windstorm Nanette, before finding it did not qualify for loss estimation.

Windstorm Barbara (also known as Urd or Connor), which struck Europe on the 25th December 2016, is also under investigation, however sources tell us that the expected insurance industry loss from Barbara could be below PERILS EUR 200 million threshold for reporting.

European windstorm Egon could be a different story though, having developed unexpectedly before targeting northern France, Belgium and Germany on January 12th and 13th. This storm is anticipated to have caused at least $100 million of insured losses, according to Impact Forecasting, but the loss could be high enough to qualify for PERILS reporting and Impact Forecasting point out that German actuarial company Meyerthole Siems Kohlruss has put the insured loss due to Egon at around $100 million in Germany alone.

European windstorm Egon windspeeds (Source: Impact Forecasting)

That suggests there could be the potential for the aggregated losses from this storm to surpass the EUR 200 million PERILS threshold, although we will have to wait some time to see whether PERILS releases an announcement on this.

Impact Forecasting explains that European windstorm Egon formed “rather unexpectedly as a secondary low on a cold front of Windstorm Dieter, southwest of Ireland on January 12” before the depression deepened rapidly as it headed for northern France.

Windstorm Egon’s lowest central pressure of 982 millibars was recorded over France’s Picardy region, and with wind gusts exceeding 130 kph (81 mph) Egon resulted in considerable damage across northern France and central Germany, Impact Forecasting explains.

IMpact Forecasting explains the impacts of windstorm Egon:

In portions of France a red severe weather alert (the highest level) was issued for northern
departments on January 12-13. Severe gusts were recorded in exposed coastal areas and in
departments of Aisne, Oise, Somme (Hauts-de-France region) and Ardennes (Grand Est region).

According to Météo-France the highest gust of 146 kph (91 mph) was recorded in Dieppe (Seine-Maritime, Normandy). This was the highest gust recorded at the station since 1987.

Widespread damage was reported, including road blockages, fallen trees, damaged power lines and disruption to rail travel. About 330,000 households were left without power while fire brigades responded to more than 4,500 calls for help. Severe winds also damaged a gothic cathedral in Soissons (Aisne, Hauts-de-France): its western rose window broke due to a particularly strong gust and the falling debris also damaged a pipe organ inside the church. According to media reports, at least 50 people were injured in France as a result of the storm.

A similar situation was reported in Germany: gusts of up to 148 kph (92 mph) caused considerable damage in central portions of the country. Additionally the storm brought significant amounts of fresh snowfall which caused disruption to travel and transportation.

The European windstorm season has so far not dealt any really severe blows, again, which will not help with the extremely low pricing of European reinsurance contracts.

European property catastrophe reinsurance programs have reached such low pricing levels in recent years that some market participants, including some insurance-linked securities (ILS) funds, have largely pulled back from the market.

The major European catastrophe reinsurance renewals appear dominated by local players, including the big four reinsurers, and the use of catastrophe bonds to transfer European windstorm risks to the capital markets has all but stopped, in recent years, as pricing has dropped so low.

However there remains exposure in the ILS investment market, largely due to collateralised reinsurance underwritten by certain ILS fund managers, but also due to the reinsurance sidecars of the major EU reinsurers.

Benign winter storm seasons have exacerbated the softening felt in Europe and in recent years the major losses have been due to severe convective style storms and hail events, or flooding.

We will update you should insurance and reinsurance losses from European windstorm Egon qualify for estimation and reporting from PERILS AG. If Egon does qualify it would be the first windstorm loss event PERILS have been required to report on since March 2015’s Mike-Niklas (Lentestorm).