AIR Currents Special Feature
Fierce Winter Storm over Europe—
Are You Prepared?
Each edition of this quarterly feature in
Event:
Strong European extratropical cyclone
AIR Currents presents a megadisaster
Model:
AIR Extratropical Cyclone Model for Europe
scenario taken from an AIR model’s
Stochastic
Event ID:
10742
Location: From southern England and northwestern
has an annual exceedance probability
France to the Baltic states
of ~0.1% (a return period of ~100
storm footprint
About 2,100 km (1,300 miles) long and 1,045 km
(650 miles) at its widest
Estimated
insured loss:
EUR 14.8 billion (USD 20.0 billion)
Annual
exceedance
probability:
~1% (100-year return period)
stochastic catalog. Each scenario’s loss
years). The physical characteristics of
the hypothetical event are described,
exposures are identified, and the AIR
model’s estimate of insured losses are
discussed.
Event Overview
A powerful windstorm smashes into southern Britain before hitting northern
France, the Netherlands, northern Germany, Denmark, and southern Sweden.
By regularly presenting and discussing
It weakens as it continues to travel east, eventually dissipating over the Baltic
the potential impacts of such entirely
states.
plausible high-impact events, these
Damage across northern Europe is widespread. Wind gusts of more than 180
scenarios can help risk managers assess
km/h (112 mph) topple trees, knock down power lines, flood lowlands, and
the possible impact to their portfolios
disrupt land, sea, and air travel in some of Europe’s most densely populated
and prepare for the unexpected.
and heavily insured areas.
Residential buildings and older commercial properties are the worst affected,
suffering damage to roof coverings, chimneys, cladding, and windows. As is
typical with European winter storms, however, major structural damage is
limited. Thus, the amount of each claim is modest, but
world in terms of aggregate average annual losses, after
the storm’s large footprint results in more than 8 million
U.S. hurricane. ETCs can also exhibit a phenomenon known
claims across Europe.
as clustering, whereby several storms can impact a similar
area within a short period of time. In 1999, one such cluster,
AIR estimates that if such an event were actually to
comprising the storms Anatol, Lothar, and Martin, brought
happen today, insured losses would be EUR 14.8 billion
much of Europe to a halt. Together, the three storms resulted
(USD 20.0 billion) across 16 countries. Figure 1 shows the
in millions of claims and caused insured losses of EUR 10
wind intensity footprint for this simulated storm.
billion at the time.
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The most destructive storm of the last 25 years was Daria,
which struck the UK, France, the Netherlands, and Germany
in January of 1990. Daria caused nearly 100 casualties and
extensive property damage, and it remains the highest
insured loss event for the UK. A recurrence of Daria today
would cost insurers about EUR 10.5 billion (USD 14.2 billion).
Table 1 shows AIR modeled losses for significant historical
ETCs against present-day exposures.
Table 1. Modeled insured and insurable loss for significant historical ETCs (EUR
billions)
Event
Figure 1. Wind intensity footprint (maximum 3-sec gusts) of Scenario ID
10742 from the AIR Extratropical Cyclone Model for Europe. This event results
in a 1% exceedance probability (100-year return period) loss for the model
domain. (Source: AIR)
Europe’s Winter Storm Setting and History
European winter windstorms (also called extratropical
cyclones, or ETCs) are frequent in northern and western
Europe, and they can wreak havoc deep into eastern
Europe as well. They usually form off the coast of
Newfoundland when a warm subtropical air mass interacts
with a cold polar one. ETCs derive their energy from the
resulting temperature gradient. They are channeled across
the Atlantic and as many as 70 can pass over Europe each
year, but only five on average are capable of causing
significant damage.
While European ETCs typically do not achieve the wind
speeds of strong tropical cyclones, their size and ability
to maintain their intensity for long distances over land
can result in total losses similar to those of a catastrophic
hurricane. In fact, European winter storms are the
second highest cause of insured property losses in the
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Insured loss
insurable loss
1976 Capella
4.6
4.8
1990 Daria
10.4
11.3
1999 Lothar
8.2
8.7
2007 Kyrill
4.2
4.6
Note that insured losses are highly comparable to insurable
losses, reflecting the high insurance penetration across all
lines of business in Western Europe. Throughout the rest of
the article, only insured losses will be reported.
Affected Exposure
Europe contains high concentrations of exposure in its densely
populated major cities, which have some of the world’s most
expensive housing and commercial markets as well as priceless
historical buildings and monuments. Germany, the United
Kingdom, and France are the second, third, and fifth largest
non-life insurance markets in the world by premium.
Europe experiences considerable diversity in storm climate,
and each region develops building codes and construction
practices in accordance with its historical storm experience.
For example, the northern UK and Scandinavia, most
frequently hit by intense wind- and snowstorms, generally
vulnerable construction types include wood frame, which
exhibit durable construction and well enforced building
is used in some agricultural and residential buildings, and
codes. In regions that experience extreme winds relatively
light metal, which accounts for 14% of Germany’s industrial
infrequently, like southeastern France and southern England,
exposures.
buildings tend to be more vulnerable. Design wind load
requirements, as specified by a collection of structural codes
The distribution of insurable property in the UK, France, and
known as Eurocodes, are based on gust speeds that have
Germany by construction type and line of business is shown in
an annual exceedance probability of 2% for each region.
Figure 3.
However, construction quality and code enforcement varies
widely. Figure 2 shows the relative wind vulnerability across
Europe.
Figure 2. Regional wind vulnerability in Europe. Buildings in regions that
frequently experience higher winds tend to be less vulnerable. (Source: AIR)
Structures in some of the hardest hit areas in the
Figure 3. Share of insurable exposures by construction and line of business for
the UK, France, and Germany (Source: AIR)
Megadisaster scenario—the southern UK, northern France,
Throughout the affected region, damage to individual
and northern Germany—are predominantly of masonry
properties is generally of low to moderate severity and non-
construction, which performs relatively well when exposed
structural in nature; it is the widespread nature of the event
to heavy wind loads and wind-borne debris. Reinforced
that results in high aggregate losses. At the storm’s wind
concrete, also a common construction type in the affected
region, typically performs better than masonry. More
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speeds, widespread damage occurs to the outer building
Figure 4 shows the distribution of modeled losses from this
envelope of homes, including to roofs, chimneys, and
simulated scenario, which is largely consistent with the wind
sidings. Roof tiles and shingles are damaged or displaced,
intensity footprint map shown in Figure 1.
especially at the corners and edges.
In more serious cases, wind can penetrate underneath
the roof covering and membrane, creating uplift, which
can result in the partial or complete removal of the roof
covering. This can compromise the structural integrity of
the building and can lead to damage to contents from
wind and precipitation. Agricultural buildings in Europe,
which are generally subject to lower design standards,
experience the highest damage ratios. Those with light
metal roofs are especially vulnerable.
Commercial buildings (and mid- to high-rise apartment
buildings and condos) are more likely to receive
engineering attention and are thus less vulnerable than
single-family homes. Still, roofs and siding experience
Figure 4. Europe-wide losses from the simulated event per km2 (Source: AIR)
damage from this simulated event, and the windows and
external glass of high-rise structures are broken by wind-
AIR estimates that this simulated event would cause insured
borne debris.
losses in excess of EUR 14 billion, more than 80% of which
occur in the UK, France, and Germany. Table 2 shows a
Extensive tree damage is expected from the high winds,
breakdown of insured losses by country and line of business.
which snap off large branches and topple shallow-rooted
trees. Trees falling onto power lines and roads are the
Losses in the UK, at EUR 6.8 billion, make up more than 45%
major cause of power and communication outages and
of the total insured loss for this event. As Figure 5 shows,
disruption to surface travel. The storm also forces the
most of the losses are distributed across the southern UK.
closure of many airports, rail lines, and seaports. Falling
More than half the total, EUR 4.5 billion, results from losses
trees also cause damage to buildings and autos.
to residential homes, with a high concentration of losses in
Estimating the Impact
Country
Residential
Commercial and Apartments/
Condos*
Industrial
Auto
Agriculture and
Greenhouses
All LOBs
United Kingdom
4,479/6,047
1,106/1,493
746/1,008
198/267
303/409
6,833/9,224
Germany
1,091/1,473
978/1,320
647/874
70/95
201/272
2,989/4,035
France
959/1,294
531/717
412/556
38/51
177/240
2,116/2,857
Netherlands
633/854
285/385
189/255
44/59
68/92
1,219/1,645
Denmark
380/512
224/302
141/190
31/42
115/155
890/1,201
Belgium
198/267
81/109
95/128
12/16
23/31
408/551
Sweden
163/220
71/96
34/46
7/9
42/57
316/427
Other Countries**
5/7
10/14
15/20
0/0
16/21
47/63
Total
7,907
3,286
2,279
400
945
14,817/20,003
*Unlike single-family or small multi-family houses, large apartment and condominium buildings frequently receive a degree of engineering attention similar to that given to
commercial construction.
**Poland, Czech Republic, Luxembourg, Latvia, Norway, Lithuania, Ireland, Estonia, and Switzerland.
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London, Birmingham, around the Bristol Channel in cities
Are You Prepared?
like Bristol and Cardiff (in Wales), and along the southern
Using model scenarios to probe your portfolio’s strengths
coast in cities like Southampton, Plymouth, and Brighton.
and weaknesses is responsible risk management practice. It is
Commercial and industrial losses total another EUR 1.9 billion
important to prepare for a wide range of scenarios in order
and are highly concentrated in London and Bristol. Bristol,
to respond effectively when disaster does strike. This scenario
a major seaport and manufacturing hub for the aerospace
is just one example of the extensive and widespread damage
and electronics industries, suffers particularly high losses to
an extratropical cyclone could produce in Europe. Its loss
industrial assets.
has a modeled annual exceedance probability of about 1%
(roughly a 100-year return period loss). This is not an extreme
tail event; far greater losses are possible.
A few modeling best practices can help ensure that your
model produces the most realistic loss estimates.
–– Building response to potentially damaging winds is highly
dependent on its location and attributes. Accordingly,
collect accurate, detailed information for the properties
that make up your portfolio—including location and all
primary building characteristics like construction type,
occupancy, building age, height—and a true replacement
value. Relying solely on coarse resolution address data can
lead to significant over- or underestimations of risk.
Figure 5. Modeled losses for the southern United Kingdom (Source: AIR)
–– Be aware of nonmodeled sources of potential loss.
Not discussed in this scenario, for example, is damage
France and northern Germany also experience high losses,
attributable to business interruption, inland flooding,
totaling about EUR 2 billion and 3 billion, respectively. In
coastal surge, sewer backups, and snow or ice.
France, high losses to homes occur in the departments of
–– Note the terms of your re/insurance treaty, including
Pas-de-Calais, Manche, Nord, and Seine-Maritime along the
how the “hours clause” applies to a storm that affects a
northern coast. In Germany, high residential losses occur in
large area over multiple days, or to multiple storms that
the northern cities of Hamburg, Bremerhaven, Flensburg,
hit the same area within the time window. For example,
Kiel, Emden, Oldenburg, and Elmshorn. Commercial and
commercial policyholders may have multiple facilities
industrial losses are heavily concentrated around Hamburg,
affected on different days from a single storm, and insurers
Hannover, Flensburg, and Kiel.
need to decide when to commence the qualified period for
reinsurance recoveries.
The highest losses to agricultural properties occur in
–– Finally, consider your loss ratio, or how your estimated
Manche, France, a predominantly rural department in
losses compare to the “total insured value” in each affected
Lower Normandy with flat prairie farmlands; Skane County
area. While your losses may at first appear to be high, the
at the southern tip of Sweden, which is the country’s most
loss ratio they reflect (typically less than 15% even in the
productive region for crops; and southern Jutland peninsula
in Denmark.
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worst affected region of this Megadisaster analysis)
to use catastrophe models to prepare for such losses. The full
should be entirely consistent with an infrequent but
range of scenarios the models generate—simulating so many
thoroughly plausible catastrophic event.
perils that impact so many places—provide a unique and
important global perspective on an organization’s overall risk.
Closing Comments
The careful analysis of model results can help risk managers
What will be the next megadisaster surprise?
prepare for many contingencies—thus ensuring that scenarios
like the one presented here will not be entirely unexpected.
AIR’s models capture the behavior of physical phenomena
and how those phenomena impact the built environment.
They have been thoroughly validated using data from a
wide variety of sources.
1
All USD amounts are based on an exchange rate of EUR 1 =
USD 1.35, current in mid-December 2013.
But no model can predict what the next mega-catastrophe
actually will be or when it will occur. This fundamental
uncertainty makes it all the more important for companies
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