The insurance and reinsurance loss estimate due to damages from two outbreaks of severe storms across Istanbul and the surrounding region of Turkey in the last fortnight are rising, with reports suggesting that the industry loss could now be above US $440 million.
At the start of this week the early estimate was that the storms, which struck the Istanbul region on the 18th July and the 27th July, could have cost local insurers as much as US $200 million. But now the expectation is that the industry loss will be more than double that amount.
The two periods of storm activity caused widely reported flooding within the city, strong winds toppling cranes, fires due to lightning strikes reported, golf ball sized and larger hail damaging cars and properties and widespread damage to agricultural crops in the region as well.
The 27th July storm was the more severe of the two, with the largest hail reported and torrential downpours.
As of the 3rd August the Turkey Insurance Association (TSB) had reported 22,000 filed insurance claims worth around US $47.5 million (TRY168 million), according to Impact Forecasting, the risk analytics and modelling unit of reinsurance broker Aon Benfield.
But Impact Forecasting said that the final insurance and reinsurance sector loss from these Turkish storms is likely to increase significantly, and that some Turkish media have reported impacts to the insurance sector of as much as US $341 million (TRY1.2 billion) from the 27th July storm alone.
The 18th July storm is now estimated to have caused an insurance industry loss of around US $100 million, according to Impact Forecasting, with US $33 million of claims confirmed as of 3rd August.
So combined it looks like the insurance industry could be looking at a US $440 million or greater impact, at which level reinsurance arrangements are likely to come into play.
Major global reinsurers are likely to be the first to take a share of the loss, given their dominance of the market in Turkey. Although any impact falling to reinsurers is not expected to be particularly large, according to market sources.
Whether any loss could seep through into the ILS market, through collateralized reinsurance arrangements, is not clear at this time.
Economic losses from the two storms are expected to be significantly higher.