European windstorm exposures up 10.1% amid inflationary environment: PERILS

Catastrophe loss data aggregator PERILS AG has released its Industry Exposure Database (IED) for 2024, which highlights the continued impact of inflationary developments on exposures, with sums insured for European windstorm up 10.1% year-on-year at constant EUR exchange rates.

This is similar, although slightly lower than the 11.7% increase reported in the PERILS IED 2023 for the European windstorm peril, as insured property values continue to show the impact of the inflationary environment.

IEDs are an important dataset for understanding catastrophe risk and can be analysed using cat risk models to determine potential market losses, and to measure an insurer’s market position and any geographic variations within the market.

The PERILS IED 2024 includes detailed sums insured exposed to natural perils of USD 111 trillion of property assets, up from USD 100 trillion in 2023.

Across all markets, the IED 2024 shows exposure growth of 11.7% year-on-year in USD terms.

In line with last year, the PERILS IED for Wind Japan “remains remarkably stable” in JPY, with year-on-year growth in the low single digits. This reflects the more moderate inflationary environment in Japan in 2023. Although, PERILS notes that in USD the sums insured represent a decline of 5.1% year-on-year due to an appreciating dollar.

The IED 2024, explains PERILS, is produced from the ground-up by collecting sums insured information from most of the insurance market across all territories covered by PERILS. The in-force date of the exposure data is January 1st, 2024, and the sums insured are available by CRESTA zone, property line of business and coverage type.

“In the IED 2024, the effects of the inflationary environment of the past few years faced by the insurance industry were still very evident. This is because inflation adjustments take time to be fully reflected in the individual portfolios of insurers,” said Christoph Oehy, CEO of PERILS. “In addition, real growth and reassessment of exposures after loss events have clearly had an impact. Furthermore, we observe a general increase in insurance penetration in countries affected by major loss events, for example for flood coverage in Germany following the 2022 Bernd flood event or earthquake coverage in Turkey following last year’s Kahramanmaras Earthquake Sequence.”

“Each year, our global team produces the market portfolios afresh, based on the Cat- exposed sums insured information provided by insurers. Improving the understanding of catastrophe risk is PERILS’ mission from day one and our annual IED update contributes to that mission. IEDs are instrumental datasets for a better understanding of Cat risk and can be analysed using Cat risk models to determine potential market losses, as well as for benchmarking an insurance company’s market position or in combination with our event loss data to provide insights into the vulnerability of insured assets. We are particularly grateful to our data providers for their ongoing commitment to providing us with their data and making such valuable learnings possible for the industry as a whole,” he added.

Dalida Bachmann, Head of Client Relationship at PERILS, said, “The availability of high-quality market exposure and loss data based on identical sources and methodology is much valued by users of our database. This consistency not only supports a range of model validation activities but also facilitates more effective risk transfer when PERILS loss data are used for triggers in insurance-linked securities and industry loss warranty transactions. Our exposure data enables users to assess the expected loss costs of such transactions and to define tailor-made, structured industry loss triggers resulting in reduced basis risk for protection buyers.”