Category Archives: Windstorm

EXPOSURE Magazine: Essential Reading in Changing Times

The pace of change continues to accelerate across the insurance industry, whether it is from technology, regulation or market developments, and EXPOSURE magazine helps risk professionals to explore some of the key drivers of these changes.

In this latest edition available for distribution at the Monte Carlo Rendezvous and online, the lead story looks at the recent market activity from Tower Insurance in New Zealand. By adopting high-definition earthquake modeling, Tower gained the confidence to launch risk-based pricing for its customers, providing savings for the majority of policyholders, but increases for others. EXPOSURE looks at the implications of Tower’s actions and how this could affect the New Zealand insurance market.

High resolution modeling has also helped Flood Re in the U.K. to better understand how it can work towards its remit of delivering a flood insurance market based on risk-reflective pricing that is affordable to policyholders. EXPOSURE shows how innovative use of modeling could guide Flood Re when recommending investment measures to protect properties at risk of flooding.

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Friederike/David: The Day Our Luck Ran Out?

Little more than a week ago, I signed off my previous blog post, discussing storm Eleanor/Burglind, with the following thought:

As the number of minor windstorms impacting Europe this season grows, we are left to wonder how many more “near misses” can we experience before our luck runs out?

At the time, I further noted that:

  • One-day-out, the forecasts for Friederike were trending towards lower and lower severities
  • As an immature and fast-moving system, these forecasts were subject to high uncertainty
  • Eventual losses would be very sensitive to gust speeds experienced in urban areas near to the forecast footprint, such as Rotterdam and Dortmund

In the week since this post, it has become clear that our lucky streak has already come to an end. Storm Friederike (also named David by Météo-France) intensified towards the upper end of the forecast severities in Benelux and Germany, bringing strong gusts to highly populated areas and producing significant insurance losses.

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Eleanor/Burglind: Another “Near-miss” for Europe?

Over the course of this winter, RMS has been publishing a series of blog posts charting the progress of the 2017/18 European windstorm season. In October last year, we outlined our forecast for a stormier-than-recent season, before checking in with an update at the end of November following three notable autumnal windstorm events. Following a relative lull in activity in December, we used the fiftieth anniversary of the “Glasgow Hurricane” as a reminder of the potential impacts when strong windstorms directly hit major urban areas.

However, at the start of 2018 this lull was broken with the arrival of storm Eleanor (U.K. Met Office/Met Éireann) / Burglind (Freie Universität Berlin), motivating us to once again check-in on the progress of the storm season. Here we outline the meteorology and impacts of this latest storm, and discuss how it fits into the seasonal forecast issued at the start of the season.

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The “Glasgow Hurricane”: A Fifty-year Retrospective

In the early hours of Monday, January 15, 1968, cyclone “Low Q” charged across northern U.K. and smashed the densely populated Central Belt of Scotland with urban winds which have only since been matched when storm Lothar hit southern Paris in late 1999. Glasgow suffered the most intense damage leading to the storm’s more common misnomer of the “Glasgow Hurricane”. This event has quite a low profile today, even in the U.K., and we use its fiftieth anniversary to highlight this exceptional European Windstorm.

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Starting with a Bang: Autumn Windstorms in Europe

December is fast approaching, and in much of North America and Europe the crisp days and golden colors of autumn are giving way to a world of sparkling lights, frenzied shoppers, and the sense of merriment that comes with the onset of the festive period. At this time of year, an equally marked transition takes place within the catastrophe risk management community, as the Atlantic hurricane season closes and attention shifts to the onset of the December to February (or, in meteorological parlance, DJF) peak season for European windstorm risk.

However, three notable early season wind events have already impacted Europe during the earlier part of this current windstorm season. These are windstorm Xavier (October 5; Germany, Poland, and Czech Republic), ex-hurricane Ophelia (October 16; Ireland), and windstorm Herwart (October 29; Germany, Poland, Czech Republic, and Austria). The earliest of these, Xavier, formed just one day after the Category Five Hurricane Maria dissipated — at a time when the attention of the global insurance market was firmly focused on the other side of the Atlantic.

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Seasonal Forecast of European Windstorm Activity: Will a Stormier Atlantic Deliver Increased Losses?

Known indicators point to stormier conditions in the North Atlantic this winter. However, what this means for Europe windstorm losses is much less certain.

Our ability to understand and forecast variability of North Atlantic winter storminess continues to improve year-on-year. Research highlights in 2017 include:

  • A new, and skillful, empirical forecast model for winter climate in the North Atlantic revealed that sea ice concentrations in the Kara and Barents Seas are the main source of predictable winter climate variations over the past three decades. Interestingly, a separate 2017 study supports earlier forecasts of either a slowing or reversal of the sea ice reductions in the Barents and Kara Seas between now and 2020, implying an uptick in storminess over the next few years.
  • An innovative tool to analyze sources of predictability in a numerical forecast model revealed strong links between tropical climate anomalies and winter climate in the North Atlantic in that model.

Twelve months ago, the forecasting indicators for the windstorm season broadly pointed to a 2016/17 season characterized by below average storminess — a forecast borne out by subsequent observations. We have already had a fairly active start to the 2017/18 season, with Windstorms Xavier, Herwart, and ex-Hurricane Ophelia causing local damage, but what is the outlook for the rest of the season?

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Europe’s Winter Windstorms – the Only Certainty is Uncertainty

The annual damage from European windstorms can range significantly: from years when there are clusters of severely damaging storms to other years with almost no windstorm loss. How much of this volatility can we predict, and how much remains a roll of the dice? And more specifically, what storm activity can we expect over the next few months?

Forecasting Storminess

Our understanding of the drivers of annual storminess has increased greatly in recent years, allowing us to provide more forecasting insight than ever before. However, there is a cautionary tale for the industry, one that shows the limitations of even the most sophisticated seasonal forecasts.

The Atlantic Multidecadal Oscillation (AMO) is a pattern of long-duration variability in sea surface temperature in the North Atlantic. It is known to influence the climate over much of the northern hemisphere including the level of storminess in Europe1. As north-south gradients of heat in the Atlantic act to fuel extra-tropical storms2 these longer term changes in sea surface temperature tend to alter the odds of extreme storm occurrence over timescales of 60-80 years. Today, the ongoing positive (warm) phase of the AMO favors lower than average storminess this winter.

Annual average values for the AMO Index, 1856-2015 (data from NOAA ESRL3). Positive values (red bars) indicate warmer sea surface temperatures across the North Atlantic, while negative values (blue bars) indicate cooler temperatures.

That’s the multi-decadal perspective. But it will come as no surprise for Europeans to hear that as well as these longer phases of relative activity and inactivity, the continent also experiences variability of storminess from year to year. We know that the jet stream is a main ingredient of storms, and that in turn these storms strengthen the jet itself, in a positive feedback loop that leads to the term “eddy-driven jet.”  This “storms-beget-storms” mechanism typically plays out over a few weeks, and more severe storms are likelier to occur during these periods. The positive feedback between jet and storms amplifies swings in annual damage, and explains a substantial amount of the storm clustering found in longer range historical weather records4. This coupling between storms and jet is reflected in the version 16.0 of the RMS Europe Windstorm Clustering Model.

Researchers have identified various drivers of seasonal storminess in the North Atlantic which, for the coming winter, are ambiguous. For instance: we are three years after the peak of a prolonged but subdued solar cycle and this timing suggests less forcing of storminess. But in contrast the predictions are for neutral to weak La Niña phases of the El Niño–Southern Oscillation (ENSO) which points to a chance of increased forcing of North Atlantic storminess. Whilst, to complicate things further, the anticipated values of tropical stratosphere winds, linked to the Quasi-Biennial Oscillation (QBO), are related to less storminess in the mid-latitude Atlantic – with the caveat that they are in an unusually disrupted pattern.

So is it possible to get off the meteorological fence and make a call? Yes: overall, the multi-decadal and seasonal drivers indicate slightly below average storminess.

Severe Events Can Occur During Any Season

But this does not mean that we as an industry should be entirely relaxed about the new storm season, as the outlook for annual storm damage is blurred by the vagaries of local weather. This is exemplified by storm Kyrill in January 2007.

Then, ahead of the 2006/07 winter, the seasonal and multi-decadal drivers indicated below average storminess, just as they do today. But Kyrill occurred and turned an otherwise innocuous season into a bad one for many. The gusts and damage during this storm were much more extreme than its general circulation, because convection cells embedded in the cold front contributed to extreme damage intensity in some areas5. Storm Kyrill showed how processes on small space and time scales can dominate annual storm damage. These drivers have seriously short predictability windows of just a few hours.

More generally, some of the past variations in annual storminess have no known driver. We are not quite sure how much, but a reasonable ball-park figure is one half. This random part is found in climate models, where the tiniest possible changes at the start of a forecast often grow into large changes in seasonal average storminess.

Although our understanding of the drivers of storminess has greatly increased over the past few years and the odds do favor less storm damage this winter, we should not be complacent. As its tenth anniversary approaches, Storm Kyrill reminds us that major losses can happen in any season, regardless of the forecast.

Web links to references above

1Peings and Magnusdottir (2014)  [ http://iopscience.iop.org/article/10.1088/1748-9326/9/3/034018/pdf ]

2Shaffrey and Sutton (2006)  [ http://journals.ametsoc.org/doi/pdf/10.1175/JCLI3652.1 ]

3NOAA ESRL AMO data [http://www.esrl.noaa.gov/psd/data/timeseries/AMO/ ]

4Cusack (2016)  [ http://www.nat-hazards-earth-syst-sci.net/16/901/2016/nhess-16-901-2016.pdf ]

5Fink et al. (2009)  [ http://centaur.reading.ac.uk/32783/1/nhess-9-405-2009.pdf ]

This post was co-authored by Peter Holland and Stephen Cusack.

Just How Unlucky Was Britain to Suffer Desmond, Eva, and Frank in a Single December?

Usually, it’s natural disasters occurring elsewhere in the world that make headlines in Britain, not the other way around. But you’d have to have been hiding under a rock to have missed the devastation wrought by flooding in the U.K. last month, thanks to the triple-whammy of storms Desmond, Eva, and Frank. Initial analysis from the Association of British Insurers suggests that the damage done could run to the region of £1.3bn.

But just how unlucky was the U.K.to suffer not just one, or two, but three big storms in one December, and for these three storms to interact in such a way as to produce the chaos that followed?

First it’s worth pointing out that floods in the U.K. are—as is usually the case elsewhere—subject to important seasonal variation (see chart below). The winter months bring the highest number of events, and December does in fact come out (slightly) on top, especially for flooding events of the sort seen last month, which tend to follow heavy rainfall leading to soil saturation (November 2015 received about twice the average climatological rainfall for November in the U.K.).

Source: RMS

The reason this matters is that, when soil is sodden following an extended period of heavy rains, further rains can more easily run off the surface, exacerbating the risk of pluvial flooding. The water will then follow natural and artificial drains until it reaches the closest river network, in which it can accumulate, potentially triggering river or “fluvial” flooding. The runaway effect of the masses of water can also cause what is known as ground-water flooding. This cumulative phenomenon means that—as we saw in December—flooding can persist for a significant amount of time, leading to several flood events in close succession.

A flood CAT model that properly captures these sorts of interactions between rainfall events and hydrological systems will allow not just for an assessment of the likelihood of a single severe event, but also a better understanding of the compounding factors that can lead to the sort of flooding seen in the U.K. last month. And based on our latest RMS pan-Europe flood model, the chances of having three rainstorms lead to major inland flooding over a single December are far from negligible.

Source: RMS Europe Flood Model

The chart above shows the probability of one, two, three, and four flood events for the month of December. What it means is that, on average, every second December in the U.K. has at least one flood event, and every third December has only one flood event. Around every eight years there are two flood events, and a cluster of three flood events happens once every quarter-century.

Now, this does not mean that flooding on the scale just witnessed happens on average every 25 years—just that this is the average period for seeing three flood events in one December. Even if it did, it wouldn’t mean that the U.K. can rest on its laurels until 2041… this is just a statistical average. It is quite possible for clusters to hit several years in a row—a so-called “flood-rich period”.

This gets to the real nub of the issue. The question of how often this sort of flooding takes place in the U.K. is almost by-the-by. The point is that it isn’t rare as hen’s teeth, and so the U.K. needs to be prepared. And what was most shocking about December wasn’t the flooding itself, so much as the sheer lack of resilience on display. A media storm has understandably been whipped up regarding the level of investment into flood walls and so on, but protective infrastructure is only part of the equation. What is needed is not just flood walls (which can actually be counterproductive on their own), but a wider culture of resilience. This includes things such as flood warning systems, regular evacuation drills, citizens having personal plans in place (such as being ready to move furniture to upper levels in the case of an alert) and, critically, the ability to respond and recover should the defences fail and the worst happen (which is always a possibility). The U.K. is the world’s sixth richest country—it has the resources to cope with flood events of this magnitude… whether they happen every five, ten or 25 years.

European Windstorm: Such A Peculiarly Uncertain Risk for Solvency II

Europe’s windstorm season is upon us. As always, the risk is particularly uncertain, and with Solvency II due smack in the middle of the season, there is greater imperative to really understand the uncertainty surrounding the peril—and manage windstorm risk actively. Business can benefit, too: new modeling tools to explore uncertainty could help (re)insurers to better assess how much risk they can assume, without loading their solvency capital.

Spikes and Lulls

The variability of European windstorm seasons can be seen in the record of the past few years. 2014-15 was quiet until storms Mike and Niklas hit Germany in March 2015, right at the end of the season. Though insured losses were moderate[1], had their tracks been different, losses could have been so much more severe.

In contrast, 2013-14 was busy. The intense rainfall brought by some storms resulted in significant inland flooding, though wind losses overall were moderate, since most storms matured before hitting the UK. The exceptions were Christian (known as St Jude in Britain) and Xaver, both of which dealt large wind losses in the UK. These two storms were outliers during a general lull of European windstorm activity that has lasted about 20 years.

During this quieter period of activity, the average annual European windstorm loss has fallen by roughly 35% in Western Europe, but it is not safe to presume a “new normal” is upon us. Spiky losses like Niklas could occur any year, and maybe in clusters, so it is no time for complacency.

Under Pressure

The unpredictable nature of European windstorm activity clashes with the demands of Solvency II, putting increased pressure on (re)insurance companies to get to grips with model uncertainties. Under the new regime, they must validate modeled losses using historical loss data. Unfortunately, however, companies’ claims records rarely reach back more than twenty years. That is simply too little loss information to validate a European windstorm model, especially given the recent lull, which has left the industry with scant recent claims data. That exacerbates the challenge for companies building their own view based only upon their own claims.

In March we released an updated RMS Europe Windstorm model that reflects both recent and historic wind history. The model includes the most up-to-date long-term historical wind record, going back 50 years, and incorporates improved spatial correlation of hazard across countries together with a enhanced vulnerability regionalization, which is crucial for risk carriers with regional or pan-European portfolios. For Solvency II validation, it also includes an additional view based on storm activity in the past 25 years. Pleasingly, we’re hearing from our clients that the updated model is proving successful for Solvency II validation as well as risk selection and pricing, allowing informed growth in an uncertain market.

Making Sense of Clustering

Windstorm clustering—the tendency for cyclones to arrive one after another, like taxis—is another complication when dealing with Solvency II. It adds to the uncertainties surrounding capital allocations for catastrophic events, especially due to the current lack of detailed understanding of the phenomena and the limited amount of available data. To chip away at the uncertainty, we have been leading industry discussion on European windstorm clustering risk, collecting new observational datasets, and developing new modeling methods. We plan to present a new view on clustering, backed by scientific publications, in 2016. These new insights will inform a forthcoming RMS clustered view, but will be still offered at this stage as an additional view in the model, rather than becoming our reference view of risk. We will continue to research clustering uncertainty, which may lead us to revise our position, should a solid validation of a particular view of risk be achieved.

Ongoing Learning

The scientific community is still learning what drives an active European storm season. Some patterns and correlations are now better understood, but even with powerful analytics and the most complete datasets possible, we still cannot yet forecast season activity. However, our recent model update allows (re)insurers to maintain an up-to-date view, and to gain a deeper comprehension of the variability and uncertainty of managing this challenging peril. That knowledge is key not only to meeting the requirements of Solvency II, but also to increasing risk portfolios without attracting the need for additional capital.

[1] Currently estimated by PERILS at 895m Euro, which aligns with the RMS loss estimate in April 2015

What Is In Store For Europe Windstorm Activity This Winter

From tropical volcanoes to Arctic sea-ice, recent research has discovered a variety of sources of predictability for European winter wind climate. Based on this research, what are the indicators for winter storm damage this season?

The most notable forcings of winds this winter – the solar cycle and the Arctic sea-ice extents – are forcing in opposite directions. We are unsure which forcing will dominate, and the varying amplitude of these drivers over time confuses the situation further: the current solar cycle is much weaker than the past few, and big reductions in sea-ice extent have occurred over the past 20 or so years, as shown in the graph below.

Figure: Standardized anomalies of Arctic sea-ice extent over the past 50 years. (Source: NSIDC)

There are two additional sources of uncertainty, which further undermine predictive skill. First, researchers examine strength of time-mean westerly winds over 3-4 months, whereas storm damage is usually caused by a few, rare days of very strong wind. Second, storms are a chaotic weather process – a chance clash of very cold and warm air – which may happen even when climate drivers of storm activity suggest otherwise.

RMS has performed some preliminary research using storm damages, rather than time-mean westerlies, and we obtain a different picture for East Pacific El Niños. Most of them have elevated storm damage in the earlier half of the storm season (before mid-January) and less later on. Of special note are the two storms Lower Saxony in November 1972 and 87J in October 1987: the biggest autumn storms in the past few decades happened during East Pacific El Niños. The possibility that East Pacific El Niños alter the seasonality of storms, and perhaps raise the chances of very severe autumn storms, highlights potential gaps in our knowledge that compromise predictions.

We have progressed to the stage that reliable, informative forecasts could be issued on some occasions. For instance, large parts of Europe would be advised to prepare for more storm claims in the second winter after an explosive, sulphur-rich, tropical volcano. Especially if a Central Pacific La Niña is occurring [vi] and we are near the solar cycle peak.

However, the storm drivers this coming winter have mixed signals and we dare not issue a forecast. It will be interesting to see if there is more damage before rather than after mid-January, and whatever the outcome, we will have one more data point to improve forecasts of winter storm damage in the future.

Given the uncertainty in windstorm activity levels, any sophisticated catastrophe model should give the user the possibility of exploring different views around storm variability, such as the updated RMS Europe Windstorm Model, released in April this year.

[i] Fischer, E. et al. “European Climate Response to Tropical Volcanic Eruptions over the Last Half Millennium.” Geophys. Res. Lett. Geophysical Research Letters, 2007, .
[ii] Brugnara, Y., et al. “Influence of the Sunspot Cycle on the Northern Hemisphere Wintertime Circulation from Long Upper-air Data Sets.” Atmospheric Chemistry and Physics Atmos. Chem. Phys., 2013.
[iii] Graf, Hans-F., and Davide Zanchettin. “Central Pacific El Niño, the “subtropical Bridge,” and Eurasian Climate.” J. Geophys. Res. Journal of Geophysical Research, 2013.
[iv] Baldwin, M. P., et al. “The Quasi-Biennial Oscillation.” Reviews of Geophysics, 2001.
[v] Budikova, Dagmar. “Role of Arctic Sea Ice in Global Atmospheric Circulation: A Review.” Global and Planetary Change, 2009.
[vi] Zhang, Wenjun, et al. “Impacts of Two Types of La Niña on the NAO during Boreal Winter.” Climate Dynamics, 2014.