A new report confirms that Europe is as vulnerable to a major insured loss as areas such as the Gulf of Mexico.

A new report confirms that Europe, far from being sheltered and risk-free, is in fact as vulnerable to a major insured loss as areas such as the Gulf of Mexico.

The analysis by AIR Worldwide (AIR) confirms that Europe could experience a winter storm resulting in insured losses in excess of €40bn ($51bn).

Europe is no stranger to devastating storms, having survived Daria in 1990, one of the largest windstorms in recent European history, which would have cost insurers more than €10bn today. “For an extratropical cyclone to produce a loss greater than we have experienced to date, it takes the right combination of just three storm characteristics: size, intensity, and path,” said Dr Peter Dailey, meteorologist and director of atmospheric science at AIR.

“The largest historical losses have resulted from storms with extremes incorporating one or two of these ingredients. At some point, we will experience a storm where all three will coincide.”

The AIR report also comes after heavy flooding in the summer of 2005 which struck central and eastern Europe including Romania, Switzerland, Austria and Germany. Far higher than average rain caused rivers to burst their banks in Romania, leading to severely damaged infrastructure, 31 fatalities and damages estimated at €1.3bn. Torrential rains also caused evacuations and fatalities in Bulgaria and saw the displacement of 14,000 people.

Jean-Louis Marsaud, director of non-life at the Comité Européen des Assurances (CEA), is adamant that Europe is still too complacent about the risks from windstorm and flooding. “It is not at all implausible that Europe will face an event of a similar or greater insured loss level as the World Trade Center,” warns Marsaud. “There needs to be the urgent development of new modelling systems to assess and quantify flood and windstorm risk. Insurers cannot solve the problem without public-private cooperation with local authorities to develop early warning systems and raise awareness among consumers.”