European windstorm Thomas/Doris could be costliest of season

by Artemis on February 24, 2017

This weeks European windstorm Thomas (or Doris) could be the most damaging of a so far relatively quiet winter 2016/17 storm season, according to reinsurance broker Aon Benfield’s Impact Forecasting division.

Windstorm Thomas - Doris satellite image from UK Met OfficeEuropean windstorm Thomas, as it was named by the Berlin Free University, or storm Doris as the UK and Irish met offices and media would have it, struck the UK the night of the 22nd to 23rd Feb 2017, before heading across the North Sea to impact northern European countries.

Winds of up to 94mph were experienced in the UK, causing significant disruption and damage, with large snowfall accumulations also reported in the north. Windstorm Thomas then moved on to impact Benelux countries and Germany, before weakening as it gradually moved into central Europe.

Impact Forecasting explained that windstorm Thomas was an example of explosive cyclogenesis, with the storms central pressure dropping by 30 millibars to 974 millibars in a 24- hour time span, a phenomenon also known as “bombogenesis” or a “weather bomb”.

While the UK saw wind gusts of up to 94mph across a wide area, the strongest gusts in the Netherlands were recorded as 75mph, Germany saw gusts into the 90’s on mountains but more widely in the mid-60’s, the Czech Republic saw a gust of 96mph on a mountain, while Slovakia recorded a gust of 132mph on a high mountain.

With damage suffered across a range of countries, including Ireland, the UK, the Netherlands, Germany, the Czech Republic and others, the impacts of windstorm Thomas (or Doris) were widespread and so the eventual tally of insurance and reinsurance industry losses has the potential to become the highest figure for a single storm this year.

Impact Forecasting notes that; “Given the extent of property damage and disruptions reported from several countries, Thomas will likely become the most damaging storm of the current season.”

Of course damaging does not always equal costly, but the widespread nature of the impacts could see Thomas’ insurance and reinsurance loss eclipse that of European windstorm Egon, which has an industry loss estimate of EUR212 million pegged against it by PERILS right now. It will be some time before an estimate emerges however.

One factor that could reign in the eventual insurance loss and any impact to reinsurance capital is insurance penetration rates.

In the UK, insurer Towergate found that around 69% of small to medium companies do not have any insurance coverage at all to protect them against bad weather. Just how high the eventual loss will go depends very much on insurance uptake in the regions affected, as damage can often be locally severe from such events.

Egon aside, there have only been four storms officially named by the UK Met Office so far this year, which is particularly quiet.

That won’t help the reinsurance rate issue in Europe, where property catastrophe programs have seen rates decline rapidly both due to the abundance of traditional reinsurance capital in the home continent of the four largest reinsurance firms, as well as the lack of major windstorm or other insurance losses in recent years.

Of course that doesn’t help the catastrophe bond cause either, and European windstorm cat bonds are now few and far between as traditional reinsurance capacity in the region is typically so cheap.

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