Following the intense, cold winter 2014/2015 in the U.S., estimations have put the resulting industry-wide insured loss figure at $2.3 billion, a $200 million decrease on the 2013/2014 season, according to Munich Re and Property Claim Services (PCS).
The initial estimations provided by reinsurance firm Munich Re’s NatCatSERVICE and PCS include the 11 major, U.S. winter storms identified by PCS.
The loss data estimates the heavy snow and winter storms that struck the states caused economic losses of $3.2 billion, some $1.2 billion less than the costs incurred during the winter of 2013/2014.
However the preliminary findings show that the gap between economic and insured losses is significantly smaller for the most recent season compared to the previous year, suggesting that insurance and reinsurance firms are picking up a growing portion of winter storm costs.
Resulting losses during the 2014/2015 winter months reveal an economic and insured loss gap of $900 million, compared with a $1.9 billion gap in 2013/2014.
Showing that the percentage of economic losses that were insured this year was higher than the previous one.
This could partly be due to higher levels of insurance penetration in the affected regions, and possibly caused by the location of snow accumulations in key Northeast U.S. metropolitan cities.
Munich Re America, Senior GEO Research Specialist, Mark Bove advised that the bulk of U.S. winter storm claims related to burst, frozen pipes which caused water damage to buildings and personal items.
“The remainder of insured losses across the winter season were primarily associated with roof damage due to the weight of snow and ice, freezing rain events downing trees and power lines, ice damming on roofs, and automobile accidents due to slippery driving conditions,” added Bove.
Boston witnessed the biggest amount of snowfall in its history as New England states were battered by snowstorms during January and February.
Despite an estimated $300 million of insured losses coming from strong winter storms in California, intense drought conditions emphasised by low levels of snowpack in the Sierra Nevada resulted in the states first mandatory water restriction.
Discussing the extreme temperature variations witnessed in the U.S. during its 2014/2015 winter season, Dr. Ederhard Faust, of Munich Re GEO Research/Corporate Climate Centre said; “If divided in two parts, the eastern part of the US in February had temperatures more than 9°F below average, while temperatures in the western US were more than 7°F above average.”
While estimated economic and industry-wide insured losses are both lower this year than that seen in 2013/2014, record levels of snow and crippling drought conditions remained.
Should harsh weather conditions like this persist year-on-year the need for affordable, sufficient risk transfer solutions and products offered by the reinsurance, insurance-linked securities (ILS) and catastrophe bond space becomes prominent.
Bove notes; “New research investigating links between climate change and the northern hemisphere winter give some indications that the arctic polar vortex is more likely to become destabilized in a warmer world, potentially leading to more mid-latitude cold outbreaks.”
Although, “It is currently unclear whether human-made climate change played any role in the severity and duration of the 2015 winter season across eastern North America,” he said.
Reinsurance broker Aon Benfield recently said that U.S. winter storm losses were on the rise. Perhaps this latest data is a reflection of this fact, and a possibility that more of the economic impact is set to fall to insurers and reinsurers to pay for.