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European severe storms & tornado may aggregate to EUR 2.5bn+ loss


Severe convective weather, thunderstorms, large hail and even a tornado struck Europe over the last ten days, as a heatwave ended and severe storms took over, which actuaries believe could drive over EUR 2.5 billion of insurance market losses.

Weather image from DreamaticoActuaries from Meyerthole Siems Kohlruss (MSK) told us that they expect the eventual property insurance market loss will surpass EUR 2.5 billion.

They also explained that, given the widespread nature of the severe storm activity seen across Europe, it will be a challenging loss to report as a single event.

We reported last Friday that insurance and reinsurance broker Aon’s Impact Forecasting division had said to expect hundreds of millions of Euro in damages after a prolonged outbreak of severe convective storms caused considerable damage across Western and Central Europe.

This severe weather wreaked havoc in parts of France, Belgium, the Netherlands, Switzerland, Germany, the Czech Republic, and elsewhere in Europe.

While it culminated in a particularly destructive tornado that severely affected four municipalities in Southern Moravia, the Czech Republic and claimed four lives.

MSK’s actuaries initially expected a loss of over EUR 1 billion, with hail and severe storms that struck Austria, Germany and Switzerland a particular driver of damages.

MSK’s actuaries liken last weeks severe hail in Austria to two previous events in the country, hail storms Tatjana in May 2000 and Wolfgang in July 2009, which each cost more than EUR 500 million in damage, based on today’s values.

“The current damage is likely to be of this magnitude,” Siems said at the time.

Although Siems also said, “In Germany, the damage will not reach the most expensive event to date, the Munich hail of 1984, because none of the large cities was fully hit.”

Hailstorms passed to the south of major cities Munich and Stuttgart this time around.

The severe storms have been affecting the region since June 19th, making for particularly challenging aggregation discussions.

Numerous named low pressure systems were deemed to drive these severe thunderstorms, hail and related weather effects, with a blocking pressure over Russia keeping them strung together and moving across European countries one after the other.

“Due to the effects of even the smallest of low-pressure areas and convergence lines, it is difficult to systematically summarize the damage, especially since different hourly clauses for storm / hail events and elementary / heavy rain are possible in reinsurance contracts,” Siems said.

Updating us this morning, Siems explained that estimates are rising fast for damages from these storms.

The actuaries now believe that low-pressure storms Volker and Wolfgang which struck between 21st and 25th of June could drive EUR 2 billion of losses alone.

On Volker and Wolfgang, “The insured losses in this period amount to more than 2 billion euros in the affected countries Germany, Austria and Switzerland. More than half of the damage occurred in Germany, mainly in the auto comprehensive insurance division,” explained Siems.

A second event this week from June 28th to July 1st 2021 came from a low-pressure named Xero.

There was major hail damage in Switzerland and intense heavy rain in Germany. The actuaries believe this period of severe weather will drive a further EUR 500 million of insured losses.

We can further add to this severe European weather with the tornado that on June 24th struck the Czech Republic and caused significant damage to a number of villages as it travelled for miles with strong winds estimated as high as 140 mph.

The Czech authorities said that over 1,000 homes were affected and in addition to the tornado, severe hail storms also struck the region.

Early estimates suggest that insured losses from this tornado could reach around the US $150 million to $200 million range, making it a costly market loss event for the Czech Republic’s insurers.

Counting claims from this tornado, alongside all the damages seen over the roughly ten days in Europe, gets you to the more than EUR 2.5 billion insured loss event, MSK believes.

Insurance and reinsurance broker Aon’s Impact Forecasting division breaks down the storms in Europe a little differently, saying that a June 17th to 25th outbreak “is poised to become the sixth costliest severe convective storm outbreak in Europe, with total economic impacts minimally listed at USD2.5 billion.”

“Insurers in Europe are potentially facing a multi-billion-dollar bill from aggregated impacts since mid-June. Preliminary estimates suggest that Austrian and Czech insurance sectors recorded one of their costliest convective weather events on record,” Aon explained.

In total, Aon believes that the economic bill for the severe weather in Europe of the last fortnight will come to more than US $3.2 billion.

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