2 weeks ago
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Impacts from the severe flooding experienced across parts of Central Europe in September 2024 are estimated to have driven an insurance industry loss estimate of close to €1.9 billion by catastrophe data aggregator PERILS.
PERILS initial estimate of insurance market losses from the flooding covers impacts to Austria, the Czech Republic, Poland, Italy, Slovakia, Hungary and Romania.
The majority, or roughly 95% of the insurance market loss fell to the first three, Austria, the Czech Republic and Poland, while next most impacted were Italy and Slovakia, PERILS explained.
This event loss estimate covers quite a wide time period, from September 14th to 20th.
Interestingly, PERILS has also announced that this loss event estimate is the first where it has combined its own methodology with that of CRESTA CLIX, another loss data service owned by PERILS.
The loss estimate for Austria and Italy are based on the standard PERILS methodology which it has now renamed PERILS CORE.
This estimate methodology is the standard PERILS approach, that involves collecting loss data from affected insurers which is then grossed up to 100% market level.
Loss estimates for territories not currently covered by PERILS are produced by the CRESTA CLIX methodology, which are “based on the expert evaluation of a wide range of insurance industry sources,” PERILS said. This is now being named PERILS EXTENDED.
Because of this change, PERILS will be able to offer loss estimates all over the world from January 1st 2025, except for the United States.
This is an interesting move from PERILS, likely driven by market feedback. It suggests the industry wants more access to loss estimates with a methodology behind them, but is more open to different types of methodologies than perhaps originally assumed.
Where PERILS estimates have been concerned in the past, their utility for risk transfer has often been held back by the fact they don’t always cover all of the territories impacted by a catastrophe event, making them more challenging to use in transactions.
Broadening their coverage using CRESTA estimates is one way to get past that. But the introduction of expert evaluation into the mix, rather than a reported loss data approach, may not be appealing to everyone either.
Back to the European flooding from September, which PERILS notes was largely due to the low-pressure system Boris (also known as Anett) that resulted in sustained heavy rainfall over a very wide area in Central Europe.
There was flooding across the Danube, Elbe, Oder and Vistula river basins and Eastern Austria, central and eastern Czechia, and southwestern Poland were heavily affected.
Storm Boris then moved towards central Italy causing flooding in the regions of Emilia- Romagna and Marche, areas already severely affected by floods in May 2023. Across the flood event an estimated 30,000 people were evacuated and 28 people died due.
Christoph Oehy, CEO of PERILS, commented, “This large-scale European flood event caused extensive damage over a considerable area. However, the combination of early flood warnings and active flood management before and during the event, coupled with other loss prevention measures implemented since other major floods in Europe, including in 1997, 2002 and 2013, helped to avoid an even worse catastrophe.
“PERILS has used this event to illustrate how the forthcoming integration of the CRESTA CLIX methodology into PERILS will work. It is an early example of how PERILS will report on events as of 1 January 2025 and demonstrates the benefits of being able to provide more comprehensive industry event loss data from a single source for the re/insurance sector.”
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