Inflation drives European windstorm exposures up nearly 12%: PERILS

The PERILS Industry Exposure Database (IED) 2023 highlights the impact of inflationary developments on exposures, revealing sums insured for European windstorm increased by 11.7% year-on-year at constant EUR exchange rates.

Catastrophe loss data aggregator PERILS AG has today released the PERILS IED 2023, which includes detailed sums insured information for USD 100 trillion of property assets.

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

The 2023 IED is generated from the ground-up by collecting sums insured data from the majority of insurance markets across all territories covered by Zurich-based PERILS. Market sums insured are available by CRESTA zone, property line of business and coverage type. The in-force date of the exposure data is January 1st, 2023.

For the 2023 update, PERILS says that the impact of inflationary developments on exposures is clear in the database. This includes sums insured for the European windstorm peril rising by nearly 12% from 2022.

As a result of the appreciation of the US dollar last year, exposure growth is more modest at 4% year-on-year in USD terms.

However, the PERILS IED for Wind Japan remains “remarkably” stable with growth in the low single digits, which PERILS says is a reflection of a more moderate inflationary landscape in the country in 2022.

Luzi Hitz, Chief Executive Officer (CEO) of PERILS, commented, “This marks the 14th annual release of the PERILS IED. Each year, we produce the market portfolios afresh, based on the Cat-exposed sums insured information provided by insurers. In this year’s evaluation, the dynamic environment faced by the insurance industry was very evident. High inflationary pressures, real growth and a re-assessment of exposure estimates have clearly left their mark. As a result, our IED 2023 shows much larger year-on-year movements than in the past, reflecting the volatile economic environment.

“2022 has been very challenging for the industry with several major Cat losses, the significant rise in inflation and global Cat capacity constraints. We are therefore particularly grateful to our data providers for their ongoing commitment to supporting us with their data notwithstanding these developments.”

Dalida Bachmann, Head of Client Relationship at PERILS, added, “The availability of high-quality market exposure and loss data based on identical sources and methodology is much valued by users of our database. Having both available in a consistent format not only supports a range of model validation activities but also facilitates more effective risk transfer.

“While PERILS loss data are used for triggers in insurance-linked securities and industry loss warranty transactions, the exposure data enables users to assess the expected loss costs of such transactions and to define structured industry loss triggers resulting in reduced basis risk for protection buyers.”