Insured property asset growth outpaces GDP, despite pandemic: PERILS

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Insured property asset values continues to expand at a rate generally faster than GDP growth despite the effects of the pandemic and the recessions it has caused around the world, according to PERILS AG.

PERILS AG logoIn releasing the latest update to its industry sums insured data set, containing exposures as at an in-force date of 1st January 2021, PERILS notes that once again European windstorm exposures remain the largest exposure in the database.

European windstorm insured property exposures reached EUR 61.6 trillion as of 1 January 2021, which is up 2.7% on the prior year.

That’s a slowdown in Euro value growth, as the prior year’s update of the industry exposure database showed a 4% increase in European windstorm sums insured.

Insurance and reinsurance market exposure to European windstorm risks remains particularly significant and it’s an important peril in the European marketplace.

However, it would be helpful to understand how that compares to the peak perils that dominate insurance-linked securities (ILS) and collateralized reinsurance markets, such as US named storm and earthquake risks, and Japan earthquake or typhoon risks, but unfortunately that data has not been shared by PERILS.

European windstorm remains a peril that some ILS markets avoid writing too much of, feeling that it remains underpriced and that major regional reinsurance firms continue to dominate European property catastrophe programs, with risks priced barely above (and sometimes at levels considered below) expected loss costs.

Zurich-based PERILS AG, a provider of industry-wide catastrophe exposure, industry loss data and indices, noted that in total its latest exposure database contains information on US $87 trillion of natural perils exposed sums insured, representing roughly US $120 billion of premium volumes.

The company notes that insured property assets continued to expand over the last year, “despite the impact of recessions in many countries due to the Covid-19 pandemic,” with insured property assets outpacing GDP growth in many countries.

It’s testament to the value of insurance and its contribution to supporting GDP growth that sums insured continued to rise through the pandemic year.

Luzi Hitz, CEO of PERILS, commented “Each year we produce the market exposure portfolios afresh by using updated sums insured data kindly provided by insurers in each country. It is a major undertaking resulting in the most up-to-date IEDs available in the marketplace. We are extremely grateful to the companies which support us by providing their data. Without their support, there would be no reliable IEDs.”

Darryl Pidcock, Head of PERILS Asia-Pacific, also said, “This is the first time PERILS has updated the motor IED for Australia, in addition to the property IED. Given the hailstorm activity in 2020 and the associated losses in both LOBs, there is no doubt that there is a lot of value in providing the IED for both motor and property. We are as always very grateful to our insurance partners in Australia and New Zealand who have been extremely supportive in providing us with their most up-to-date information.”

Dalida Bachmann, Head of Client Relationship at PERILS, added, “Our exposure and loss data are based on identical sources and methodology. This consistency is much valued by users of our database as it eliminates data uncertainty, a big plus when validating model output, analyzing the vulnerability of insured assets, or when assessing the expected loss costs of industry-loss-based risk transfer products. This better understanding of Cat risk was PERILS’ mission from day one and our constantly expanding databases continue to contribute to that.”

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