There is a well-known mantra in the insurance industry that “it only takes one” – one catastrophic event to make a memorable impact. Many past events still resonate today, from Hurricane Andrew to the Tohoku Earthquake, all severe intensity events that struck an area of high exposure.
Although in many ways 2021 was an average year in terms of insured losses, the year contained a number of surprises, and these events were spread across several perils. These events led my colleague Robert Muir-Wood, RMS® chief research officer for RMS, to declare in a recent blog that 2021 was the “Year of the Scorpion” as several of the events had a “sting in the tail.”
We recently published our comprehensive RMS 2021 Catastrophe Review report, which is available to clients on RMS Owl, and also the RMS 2021 Catastrophe Review: Executive Summary, which is now available for download.
COVID-19: Variants and Vaccines
For a second year, COVID-19 continued as the most wide-reaching global catastrophe. The year was dominated by new virus strains, from Alpha to Omicron, generating new waves of infection but with a difference from 2020. Many countries – weighted towards those in the developed world – benefited from effective vaccines and treatments. The impact on insurers in terms of losses is still to be established.
Hurricane Ida: Biggest Insured Loss of 2021
Even though 2021 was the third-most active hurricane season on record and the sixth-consecutive season with above-average activity, the insurance industry is talking about only one event: Hurricane Ida.
On August 29, Ida made landfall as a Category 4 hurricane near Port Fourchon on the Louisiana coast. Ida sustained Category 3 winds for seven hours after landfall; on its journey north and north-eastward, Ida lost wind intensity, but continued to produce heavy rainfall. It caused significant flooding across the Tennessee Valley, the mid-Atlantic, and the Northeast.
Ida’s onshore losses are estimated by RMS at between US$30.3 billion and US42.5 billion. It represents one of the costliest hurricanes on record, exceeding the total loss caused by all six hurricanes that struck the U.S. in 2020.
Texas Deep Freeze
One of the biggest events of the year came from an unlikely but not unforeseen source. Arctic winds and two powerful winter storms brought extremely cold temperatures, heavy snowfall, and ice accretion to a sizeable portion of the contiguous U.S. and parts of Canada from February 13–20. More than 200 million people were under winter weather warnings. The event is estimated to have cost Texas at least US$23 billion in economic loss, making it the costliest winter weather event on record.
Record-Breaking Flood Losses in Europe and China
July 2021 saw Europe’s costliest natural catastrophe as record-breaking flooding resulted in damage and destruction in Belgium, eastern France, and parts of western Germany. The national meteorological service of Germany, Deutscher Wetterdienst, reported that the quantity of rain that fell in certain areas was possibly higher than any seen in the last 1,000 years. The extreme rainfall, saturated soils, and the region’s narrow and steep river valleys saw high river depths and significant water velocity producing severe damage to buildings and infrastructure.
Just after the floods in Europe, China experienced record-breaking rainfall in Henan Province, located in the Yellow River Basin. In the provincial capital city of Zhengzhou, 127 percent of the average annual rainfall fell between July 17 and 21, which left over 381,000 homes, 400,000 vehicles, and 2.6 million acres (1.1 million hectares) of crops damaged.
The province’s emergency management department reported that a total of 14.8 million people in 150 counties were affected by flooding. The flooding in Henan led to insured losses estimated at around CN¥12.4 billion (US$1.9 billion) – the highest natural catastrophe payout for the Chinese insurance industry on record.
Event Response Innovation
The year 2021 will go down in history as a challenging one for the insurance industry, another in a stretch of years dating back to 2017 that brought game-changing events that altered our understanding of natural catastrophe risk.
As a result, the RMS approach to event response continues to evolve. Building on our work from last year, where pandemic lockdowns curtailed our usual on-the-ground event reconnaissance, the deployment of machine learning and artificial intelligence algorithms continues apace, providing significant scale to our surveying operations and footprint validation.
Integration of RMS Event Response service with the ExposureIQ™ application is just the first step in delivering a superior event response experience within the RMS Intelligent Risk Platform™. And as we move through 2022, RMS wants to go further for clients, providing actionable event insights to quickly understand potential losses and to understand the evolution of catastrophes in real time.
Please download the new RMS 2021 Catastrophe Review: Executive Summary which provides context and analysis of the year’s most notable industry events – and key insights we can carry into the years ahead.