European windstorm Niklas losses €1B to €1.9B: AIR Worldwide

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Risk modelling firm AIR Worldwide estimates that the insurance industry loss from recent European windstorm (or extratropical cyclone) Niklas will range between €1 billion to €1.9 billion.

European windstorm Niklas struck northern Europe on the 30th March, causing damage across a number of countries in the region. PERILS AG, the European insurance loss data aggregator, has already announced that it would be analysing the losses from Niklas as it expected the impact to grow above the €200m threshold it sets for events to require reporting on.

The majority of the damage from Niklas occurred in Germany, but losses were also occurred in Austria, Belgium, the Czech Republic, France, Ireland, Luxembourg, the Netherlands, Poland, Switzerland, and the UK. AIR’s estimates include wind damage to onshore residential, commercial, industrial, and agricultural properties (and their contents), and automobiles.

“On March 29, a low pressure system (Niklas) formed and then strengthened the next day as it moved southeastward over Europe,” commented Yörn Tatge, managing director of AIR Worldwide GmbH. “On March 31, Niklas developed into a strong storm centered over Denmark and the southern Baltic Sea, bringing high winds and heavy precipitation to Germany and parts of the UK. By the evening of March 31, Niklas’s cold front arrived in the alpine region of Germany, causing widespread intense precipitation and strong squalls. Recorded wind speeds for Niklas across Germany ranged from 119 km/h in various coastal areas and on Wasserkuppe, 151 km/h on Feldberg in the Black Forest, up to the maximum reported measurement of 192 km/h on Zugspitze, which is Germany’s highest mountain.”

According to AIR Niklas moved further eastward, causing intermittent squalls, heavy precipitation, and thunderstorms, as well as snowstorms in locations less than 500 meters above sea level. The storms downed trees that caused damage to vehicles and buildings, including their roofs and façades, and disrupted rail and air travel during the busy holiday season.

Tatge concluded, “Gust wind speeds compared to mean wind speeds were unusually high and compare to values for Kyrill in 2007. Although the average wind speeds for Niklas are lower than for Kyrill, the extent of damaging winds is comparable, which makes Niklas one of the larger storms to have impacted Europe.”

AIR said; “Due to the relatively low wind speeds (compared to hurricanes), the average claim size is expected to be low. However, the spatial extent of damaging winds is quite large for this storm and therefore claims may sum to a significant amount. In combination with the uncertainty of the wind footprint, this is a significant factor of uncertainty in potential losses.”

AIR’s industry insured loss estimates reflect:

  • Insured physical damage from wind to property (residential, commercial, industrial, agricultural, auto), both structures and their contents

AIR’s insured loss estimates do not include:

  • Business interruption and additional living expenses (ALE) for residential claims for all modeled countries, except the UK
  • Losses to uninsured properties
  • Losses to infrastructure
  • Demand surge (AIR’s demand surge function is not triggered by this event)

At €1 billion to €1.9 billion, the insurance industry loss from windstorm Niklas will not worry catastrophe bonds, but it could become a concern for some reinsurance programmes, if any European primary carriers are particularly badly hit.

That could have an impact on certain ILS funds that participate in European reinsurance programmes on a collateralized basis. However, at the current estimated €1 billion to €1.9 billion of insurance industry loss, any impact to ILS funds will likely be minimal.

Also read:

PERILS to investigate European windstorms Niklas and Mike.

Insurance losses from storm Niklas not expected to trouble cat bonds.

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