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While wind speed can indicate a storm’s damageability, two storms with similar peak wind speeds can cause vastly different levels of damage if they pass over locations with different concentrations of exposure.

This month marks the 15th anniversary of Lothar and Martin. Two powerful storms that tracked violently across Europe on December 26-28, 1999.

The combined European loss of both storms is in excess of $11 billion (2013 values). Since the storms occurred within days of each other it’s difficult to calculate the exact split of damage, however a 70:30 ratio is commonly accepted, ranking Lothar as the second largest Europe windstorm loss on record after Daria (1990).

France was hit hardest by the storms—particularly Paris, which was right in the bullseye of Lothar’s most extreme physical characteristics. The recorded wind speeds in the low-lying regions of Paris were above 160 km/h and as high as 200 km/h at the top of the Eiffel Tower.

An exceptional storm

While Lothar’s wind speeds are comparable to other historical Europe windstorms, it’s considered an exceptional event for the insurance industry because of its track and the timing of its maximum intensification over Paris. Today, Lothar is a key benchmark used by the industry to understand the potential magnitude of Europe windstorm losses.

Lothar-blog-france

Lothar – a one-off for France?

Many industry experts believe Lothar to be higher than a 100-year return period loss event for France; however this should be interpreted as a long-term average and France could potentially experience a similarly extreme storm this winter.

Using current industry exposures, RMS calculated the potential French losses that would result from a Lothar-like storm striking different locations in France. By relocating Lothar’s peak gusts along points up to 500 km in each direction from their original location, our modelers concluded that Lothar was the fourth worst-case storm that could have happened out of a total of 437 scenarios.

The worst-case scenario for France is a Lothar-like storm relocated approximately 100 km west of the original event but which would still significantly impact Paris. The losses from this scenario are not much higher than Lothar’s. At only 15 percent higher the small increase in loss reinforces Lothar as an exceptional benchmark for the insurance industry.

Lothar-blog-worstcase

We found that the majority of scenarios in the study produced notably lower losses. This is because the displacement of the storm, by even small distances, meant that the most extreme wind speeds impacted much lower concentrations of insured exposures. The study reinforces our understanding of the sensitivity of windstorm loss to a storm’s path. It also highlights the importance of using a stochastic model containing tens of thousands of events to be able to comprehensively evaluate potential windstorm losses.

Lothar-blog-chart

London at risk

No European city is immune from damaging windstorms. RMS also re-located Lothar over London—only a 350 km shift to the north—to see what the impacts would be. We calculated the insured loss for Europe could be as much as 25 percent higher than Lothar’s losses and potentially bigger than the $8.6 billion loss caused by Daria.

Lothar-blog-london

The uncertainty inherent to the climatic phenomena that drive windstorms makes it impossible to forecast exactly when and where the next strong storm will hit France or Europe. However, catastrophe models can at least help to evaluate the potential financial impact of extreme storms like Lothar.

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Laurent Marescot
Laurent Marescot
Senior Director, Market and Product Specialists, RMS

Laurent is a catastrophe risk management expert at RMS, advising some of the largest companies in the (re)insurance industry how to best manage their nat cat, agriculture, cyber and terrorism risks. He also interacts as an expert for governmental and regulatory authorities. Laurent initially joined RMS in 2008 as part of the account management team, servicing the European (re)insurance and ILS market. He then headed the model product management group for all EMEA and APAC climatic/weather risk perils, such as windstorm, typhoon, severe convective storm and flood, as well as RMS global agricultural risk.

Prior to RMS, Laurent worked 3 years at the Swiss Federal Institute of Technology Zurich (ETHZ) as a Research Associate and Lecturer, managing multidisciplinary research projects. Laurent still lectures regularly on catastrophe modeling and insurance risk quantification at universities and gives seminars and invited talks in international industry conferences. Laurent co-authored numerous industry publications, peer-reviewed scientific articles and proceeding papers. He holds an MSc in Geology from the University of Lausanne and a PhD in Geophysics from the University of Lausanne and the University of Nantes.

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