PCS reports U.S. catastrophe insured losses up 19% in 2014

Insured losses across the U.S. as a result of catastrophe events increased 19% on 2013’s total, at $15.4 billion, as the frequency of events toppled the ten-year-average, according to the latest data from Property Claims Services (PCS) Q4 and Full-Year 2014 Catastrophe Review.

The information in the report looks at PCS-designated catastrophe events only, being disasters that PCS believes will cause an industry loss of $25 million or greater, and despite a hike on last year’s figure the PCS U.S. insured loss total is someway off the ten-year-average, of $22.7 billion.

2014 U.S. Catastrophe Loss Activity - Source: PCS

PCS noted 32 catastrophe events throughout the states for the entirety of 2014, a minimal increase on the 29 recorded in 2013, but surpassing the ten-year-average of 29.5 events. PCS notes that; “Over the past ten years, 2014 is one of only five years in which the number of catastrophe events designated by PCS reached at least 30.”

The report also explains that resurveys are open on one catastrophe event, while initial estimates for another event are yet to be submitted, meaning there’s a high possibility the $15.4 billion figure will be raised.

The impact of catastrophe events was felt across 38 U.S. states, Texas was the most affected region with costs equaling $2.2 billion.

Colorado, Illinois, Pennsylvania and Nebraska completed the top five most affected states, which all incurred costs surpassing $1 billion, at $1.7 billion, $1.2 billion, $1.2 billion and $1.1 billion, respectively. Again, PCS notes, catastrophe-prone Oklahoma doesn’t feature in the top ten most affected states.

Q4 2014 alone witnessed a particularly high frequency of events; as PCS recorded six individual catastrophes, almost double the ten-year-average of 3.3. Despite this, the fourth-quarter of 2014 was the quietest Q4 since 2009 ($200 million), creating costs of roughly $700 million.

Q4 2014 U.S. Catastrophe Loss Activity - Source: PCS

The company’s catastrophe report also offers a breakdown of losses in respect of business lines, revealing a 2% hike on commercial losses from 2013, at 21%, and a 2% loss dip for personal losses, at 60% – auto came in the same as the previous year at 19%.

U.S. Catastrophe Losses By Line of Business 2013 vs 2014 - Source: PCS

PCS’ catastrophe review also includes data from the impact of catastrophe events in Canada, signaling that insured catastrophe losses dropped by a huge 72% year-on-year. The study notes that; “While that may appear to be a significant drop, 2013 was the most active year on record for PCS Canada, with more than $3 billion in insured losses from PCS-designated catastrophe events.”

Total insured losses across Canada totaled roughly C$900 million ($751.566 million) from a total of five events, one of which was in the fourth-quarter, coming in slightly below the country’s frequency five-year-average of 5.8 events.

The single Q4 catastrophe event impacted one of Canada’s most catastrophe-prone provinces, Ontario, whilst also affecting Quebec. Over the last four years Ontario and Alberta, the latter another particularly catastrophe-prone region in Canada, have incurred combined cat losses of $7.1 billion.

For the entire North American region PCS-designated catastrophe event frequency was up on 2013 by two events, at 37. But regardless of this insured losses across the U.S. and Canada were some way off the PCS averages.

Despite a climb in the amount of adverse weather events and a slight increase in the severity of these events, while insured losses remain below the long-term averages there is nothing to prevent continued downward pressure on insurance and reinsurance rates.

You can download a full copy of PCS’ Q4 and Full-Year 2014 Catastrophe Review.