Windfall or a Windy Fall?

On my recent trip to Warsaw, the fall leaves were in full color – yellows and oranges lined the wide streets. Beautiful to look at but a reminder that it is a worrying time for (re)insurers as the European windstorm season commences.

With the recent passage of Windstorm Christian, (re)insurers will be watching to see what the remainder of the season brings… A quiet windstorm season means lower catastrophe losses but a windy fall could cost billions.

In a typical season, only a small number of the many depressions that form along the jet stream develop into potentially damaging windstorms.

In recent decades, however, there has been considerable variability in windstorm frequency. The chart below demonstrates the average annual loss (AAL) from windstorms over varying periods since 1972.

While Europe has experienced significant windstorm events during this time, notably in 1987, 1990, 1999 and 2007, there is an apparent trend of decreasing AAL over time.

Europe windstorm AAL for selected periods relative to long-term AAL based on RMS storm reconstructions from windspeed anemometer data, using the RMS v11 model

Europe windstorm AAL for selected periods relative to long-term AAL based on RMS storm reconstructions from windspeed anemometer data, using the RMS v11 model

So what’s going on?

Of course this trend could be just noise in the system and it may not continue, but what if it does?

Can we forecast seasonal activity?

European windstorms are often linked to the North Atlantic Oscillation (NAO), a measure of the surface-level pressure between the Azores and Iceland. When anomalously positive, the possibility of damaging windstorms across northern Europe increases. Currently, however, the NAO cannot be predicted on a timeframe that makes seasonal forecasts possible.

Even if we could make seasonal forecasts, uncertainty remains regarding where and when storms strike. We are all familiar with the infamous windstorm seasons of 1990 and 1999, when clusters of powerful windstorms caused insured losses of $18 billion and $14 billion, respectively (2012, Swiss Re).

Clustering can be spatial and/or temporal.

  • Spatial clustering refers to the occurrence of multiple storms in the same region
  • Temporal clustering occurs when multiple storms occur at the same time

Windstorms Lothar and Martin were clustered spatially and temporally, as was the extraordinary sequence of storms in January – February 1990 that swept across Europe.

Clustering is meteorologically complex; the scientific community doesn’t know enough about the dynamics of clustering to be able to forecast the phenomenon on sufficiently useful lead times.

And what about climate change?

In the recent IPCC report, there was low confidence associated with their forecasts of future Europe windstorm behavior. And compared to inter-decadal variability, the climate change signal is weaker, so perhaps that should be of greater concern to the (re)insurance industry.

These are front-of-mind topics requiring further exploration. At a recent workshop co-hosted by RMS and the Risk Prediction Initiative (RPI), leading academics from the field of European windstorm research (ETH Zürich, University of Reading, Freie University Berlin, University of Oxford; University of Birmingham) met with RMS scientists to discuss their latest research, helping us to develop our understanding of these important topics.

In summary, there is no easy answer to the topic of seasonal European storm forecasts.

In the meantime, industry participants will take a view, and wait to see whether they experience a windy fall or a windfall. Only time will tell.

Senior Director, Model Product Strategy, RMS
Brian Owens is a meteorologist and specialist in catastrophe risk management. At RMS he is responsible for market engagement and product strategy for the European and North America models.

Brian has more than 15 years’ experience in insurance, catastrophe financing and catastrophe risk management and has held senior positions at JP Morgan Chase, ACE European Group and Willis Re. He is also a published science author, and has written numerous articles and blogs on catastrophe risk modeling and management.

Brian holds a bachelor’s degree in computer science from the National University of Ireland, a master’s in finance from the Wharton School, University of Pennsylvania, and a master’s in meteorology from the Rosenstiel School of Marine and Atmospheric Science, University of Miami.

4 thoughts on “Windfall or a Windy Fall?

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