The severe floods across Europe in July 2021 are estimated to have caused an insurance and reinsurance industry loss of US $11 billion, according to organisation Cresta, while convective storms in June added another US $5.1 billion to the summer loss tally for the continent.
Updating its CLIX (CRESTA Industry Loss Index) figures for the third-quarter, the organisation calls the European floods the largest international industry loss in 2021 to-date.
Of course, it wasn’t actually, but Cresta doesn’t cover US losses, so doesn’t have a figure for hurricane Ida which is likely to be close to three times as costly for insurance and reinsurance markets.
Cresta’s CLIX database covers US $1 billion plus industry loss events globally (except for the United States) and now includes 33 catastrophe events from the last three years.
Year-to-date the western European flooding, which saw most of the costs in Germany, is estimated to be the largest event at US $11 billion.
Roughly US $8.3 billion of the industry loss is estimated to have occurred in Germany alone, according to the countries insurance association.
On top of this, convective storms in June that struck Europe are estimated to have cost the insurance and reinsurance industry US $5.1 billion, taking the summer loss tally to over US $16 billion in Europe.
This is expected to cause upwards pressure on reinsurance rates at the January 2022 renewal season, as the most costly year of European catastrophe losses for over two decades.
With hurricane Ida set to drive a significant loss burden for major European reinsurance carriers, these floods and summer storms just exacerbate the recent toll for these companies and should see at the very least a differentiated approach to European property catastrophe renewals in 2022.
Other major losses Cresta has covered this year include the Fukushima earthquake in Japan in February with an industry loss of US $2.5 billion and China’s extreme rainfall in July that drive flood-related industry losses of US $1.9 billion and became the largest catastrophe loss ever for the Chinese insurance market.
Commenting on the nature of loss activity in 2021, Cresta said, “While the weather patterns are not directly comparable, it is striking that three of these events are linked to bursts of extreme precipitation during the summer months which caused devasting flooding and hail. This is in line with climate-related model forecasts, which indicate an increase in severity and frequency of extreme precipitation events resulting from higher temperatures and increased water-holding capacity in the atmosphere.
“Coupled with the growth in insured assets, this ever-changing risk landscape creates a formidable challenge for the insurance industry.”
Matthias Saenger, Technical Manager of CLIX, also commented, “The benign period in international Cat industry losses in 2020 and until early 2021 changed dramatically in June when severe convective storms in Europe brought extreme rainfall and hail, causing significant damage primarily across Germany and Switzerland. These storms were followed by the major flood events in July in Europe and China, which generated record losses for the insurance industry.”