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Catastrophe data aggregator PERILS has now raised its insurance industry loss estimate for the severe flooding experienced across parts of Central Europe in September 2024 due to storm Boris, increasing the total by 10% to €2.08 billion.
This industry loss estimate is the first event where PERILS is using its new methodology that combines its own more typical methodology, based on reported data, with that of CRESTA CLIX, another loss data service owned by PERILS that is based on a range of sources.
As we explained before, PERILS now has its standard PERILS CORE approach, that involves collecting loss data from affected insurers which is then grossed up to 100% market level, and also the CRESTA CLIX approach that is based on the expert evaluation of a wide range of insurance industry sources. The two are combined here, and PERILS said this is a move to broaden its coverage to the entire globe, apart from the United States.
The first event to use this new methodology was the European flooding caused by storm Boris, which caused insurance market losses across Austria, the Czech Republic, Poland, Italy, Slovakia, Hungary and Romania.
PERILS initial estimate for the event was €1.886 billion, reported in early November.
Now, the industry loss estimate has risen by just over 10% to €2.08 billion, PERILS reported today.
Most of the losses came from of the losses occurred in Austria, the Czech Republic and Poland, while Italy and Slovakia were also flooded by this event.
Christoph Oehy, CEO of PERILS, said, “Europe has to date experienced three flood events in 2024 which have generated major losses for the insurance industry. These include the floods in southern Germany in June, in Central Europe in September, and most recently in the Valenica region of Spain in October. Together these events have caused industry losses of more than EUR 7 billion, a figure only topped by the Bernd floods of July 2021, and clearly demonstrate the increasingly critical role of the European insurance industry in recovery efforts following major flood disasters.
“As with our first loss report for the Central Europe Floods, we have combined the PERILS and CRESTA CLIX methodologies to produce the industry loss number for each of the affected countries. This methodology will be applied by PERILS to all events from 1 January 2025 onwards and today’s estimate helps to demonstrate the benefits of having a single source for international Cat industry losses.”
The new methodology from PERILS is both interesting and potentially important, as the reinsurance and insurance-linked securities (ILS) market lacks reliable triggers for industry-loss risk transfer instruments in many parts of the world.
The question though, is whether market participants will utilise a trigger data provider that has an element of expert judgement included, over an industry reported approach that PERILS standard methodology employs.
Of course, the industry reported approach also has its drawbacks, especially in countries where reported coverage may be a low proportion of market share, or particularly concentrated with one of the larger, global players.
If the market can get comfortable with an industry-loss trigger that has expert judgement included within its methodology, it could open up new regions to ILW type risk transfer, or even industry-loss trigger catastrophe bonds. As a result, it will be interesting to see this new approach from PERILS roll-out more broadly next year.
English (US) ·