Catastrophe exposure increases for Euro windstorm & PERILS territories

Catastrophe exposure, as measured by insured property values featured in the PERILS AG Industry Exposure Database, increased for European windstorm risks and other territories covered by the service provider in its latest exposure database update.

The 2019 update of the PERILS Industry Exposure Database (IED) shows that there is a constant rise in exposures, with the pace of the increase seen as highest in the more emerging areas of the database, compared to the more mature insurance markets.

PERILS AG is a Zurich-based company providing industry-wide European catastrophe insurance and reinsurance data and loss indices, also acting as a loss reporting agency for industry loss triggered instruments.

Exposure data featured in the new IED is built from the ground-up and based on sums insured information gathered from over 100 national and international insurance companies, representing more than two-thirds of the property market across all territories covered by PERILS.

In total and across all territories, the exposure database is based on a total premium volume of EUR 79 billion (USD 90 billion) across around 219 million property insurance policies.

The data, which is as of January 1st 2019, shows that European windstorm risk remains the largest exposure in the database, based on around 191 million individual risks representing approximately EUR 57 trillion of insured property values.

Overall European windstorm sums insured increased in EUR by +3.8% (+4.0% at constant FX rates) compared to Jan 1st 2018, PERILS said.

Across PERILS other territories, Australia, Italy and Turkey, the changes ranged from +1% to +32% (-17% to +8%), with movements mainly driven by changes in collected sums insured data and market benchmark adjustment.

Luzi Hitz, CEO of PERILS, commented, “This year’s update marks the 10th annual release of the PERILS IED. Like every year, the market portfolios were produced by collecting the Cat-exposed sums insured from insurance companies in each country and by calculating the market sums insured based on the collected data.

“The fundamental purpose of our IED is to increase data availability for Cat insurance, thereby increasing the understanding and tradability of Cat risk. Our success over the years is proof that the insurance industry is actively supporting our efforts. We are as ever grateful for this support and take it as encouragement to expand our market coverage to other important Cat markets.”

For insurance and reinsurance markets, as well as insurance-linked securities (ILS) funds, the exposure data can be a valuable addition to risk modelling analysis and allows for portfolios to be benchmarked against the actual exposure levels to specific perils, which is also useful when designing reinsurance and retrocession covers.

Eduard Held, Head of Products at PERILS, also said, “The difference between the PERILS IED and other IEDs is that it is purely based on company data exclusively received from insurers. This means it represents the exposure reality to the highest possible degree. When combined with data from the PERILS event loss database which is based on an identical methodology, it serves as a robust basis for market benchmarking, validating natural catastrophe models, the structuring and risk assessment of industry loss-based risk transfer products such as Cat bonds or ILWs, and the analysis and calibration of vulnerability functions.”

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